Implement SPEED, ERC tells Meralco

The Energy Regulatory Commission (ERC) ordered last Friday (July 25) the Manila Electric Company (Meralco) to implement the Special Program to Enhance Electricity Demand (SPEED) of the National Power Corp. (Napocor).

The order will enable industrial customers of Meralco to enjoy a 12-centavo per kilowatthour (kWh) discount on incremental electricity usage.

At the same time, the ERC granted a provisional authority to National Transmission Corp.’s (Transco) application to undertake the Transmission Incentive Program (TIP) which will provide a 10-centavo discount to large electricity consumers, both industrial and commercial.

SPEED is part of the 10-point plan of the Arroyo administration crafted last year to reduce power rates.

Specifically, the SPEED is aimed at encouraging the increase in the usage of existing power plants in the grids. Effectively, this program reduces average power costs for large electricity end-users, both industrial and commercial.

SPEED is a joint project of Napocor, the Department of Trade and Industry (DTI) and the Department of Energy (DOE) that intends to give preferential rates to industries and power-intensive commercial users.

Those interested to avail of the discount should apply to Meralco and only Meralco customers since July 2001 will be eligible. Most of the industrial and commercial customers of Meralco can be found in the industrial areas and economic zone estates of Laguna, Batangas, and Cavite.

The program will be carried out in two phase. Phase I of the program is opened for industries with a minimum load of 1,000 kilowatts, around 224 expected industrial customers are expected to benefit from this initial stage. The second phase, on the other hand, can be availed by industries with a load of at least 500 kW. About 1,148 customers fall under this category.

The discount will only apply to the incremental consumption determined through the Customer Baseline Load (CBL) for the quarter. With this, SPEED encourages power-intensive industries to extend productions hours and shift schedules to encourage more use of electricity that will in turn stir economic activity and wipe out the unutilized capacity.

Among the industries still capable of expanding operations are electronics, garments, and semiconductors.

The SPEED program takes effect immediately, until the implementation of the Wholesale Electricity Spot Market (WESM), or whenever there is no available Napocor unutilized capacity in the Luzon Grid, whichever comes first.

The program also forms part of the accomplishment report submitted by ERC chairman Manuel Sanchez to President Arroyo in time for her State of the Nation Address (SONA) today.

Aside from SPEED, Sanchez said they have decided upon 34 unbundling rate applications. The unbundling of rates, as provided under the Electric Power Industry Reform Act of 2001, will make the electric bills clear and informative and the customers of electricity will be able to see the rates of each service they are paying.

Sanchez also reported that about 92 electric cooperatives have been granted provisional authorities to reduce rates by an average of 25 centavos due to writing off of their loans.

He said the ERC also approved the so-called lifeline rate which is a subsidized rate for marginalized end-users who cannot afford to pay at full cost. The level of discount ranges between five percent to 50 percent depending upon the consumption of the electricity user. From the distribution utilities whose rates have been unbundled by the Commission, an estimated average of 36 percent of residential consumers is expected to benefit from the lifeline discount.

– Donnabelle Gatdula

The ERC, he said, has also issued the Transco Regulatory Framework which will benefit both investors and consumers by improving efficiency of utility operations, and ultimately bringing about long-term benefits to consumers in terms of providing more affordable electricity rates and greater quality and reliable electric service.

Sanchez said the ERC also approved a Price Determination Methodology for determining the price of electricity not covered by bilateral contracts between sellers and purchasers of electricity users. This would be applicable when the WESM becomes fully operational. Electricity consumers will benefit in a competitive electricity market since the price of electricity will then be dictated by market forces.

The ERC chief said the commission also ordered in the imposition of a universal charge which is a non-bypassable charge imposed for the recovery for the stranded debts, stranded costs of Napocor, and stranded contract costs of eligible contracts of distribution utilities and other mandated purposes.

At present, the unbundled bill is composed of two (2) components of Universal Charge, namely: (1) Missionary Electrification Charge of P0.0373/kWh for the provision of basic electricity service in unviable areas with the ultimate aim of bringing the operations of these areas to viability levels; and (2) Environmental Charge of PhP0.0025/kWh for watershed rehabilitation and management projects.