ERC studying 3 options in Meralco rate hike petition

The Energy Regulatory Commission (ERC) is studying three alternative rate designs for Manila Electric Co.’s recent rate hike petition, chairman Manuel Sanchez said yesterday.

At the same time, the ERC reiterated that there would be no rate increase for Meralco this year as hearings for the company’s new rate hike petition will take time.

"I doubt if we could hand down a decision this year. The last filing of Meralco took more than one year and 40 public hearings before it was decided on. It’s a very long process but we are very cautious in studying their application," Sanchez said.

Describing the decision for Meralco’s rate petition to happen within the year as "impossible," Sanchez said the ERC has yet to schedule the public hearings.

He said all industry stakeholders, including consumers groups, are welcome to participate in the hearings.

According to Sanchez, there are a number of groups that have informed the commission of their willingness to attend the hearings. These are the Freedom for Debt Coalition, Bayan, Association of Mindanao Industries, Cathay Pacific Steel Corp., and National Association of Electricity Consumers for Reforms.

On the rate alternative design, Sanchez said first option is the same rate design prescribed by the ERC in its May 30 ruling, or under the unbundled rate application of Meralco.

The second alternative, he said, will incorporate changes embodied in the company’s pending motion for clarification filed last July 1, with the ERC, which includes the alignment of the transmission and distribution changes with cost of service.

The ERC chief said the last alternative contains other major rate design enhancements on top of those in the second alternative, similarly meant to align all other charges with cost of electric service.

Sanchez said Meralco is also expected to submit the proposed scheme for the third phase of the refund process, which will cost the utility firm P4.9 billion.

"We were told that they will file Phase III this Friday. It will cover big residential consumers with a monthly consumption of 301 kwh and above and will cost Meralco P4.9 billion," he said.

He said Phase III will start in January next year. Phase 4, meanwhile, will commence after the third phase is carried out.

"The industrial users have indicated to me their impatience on the Meralco refund. Others, meanwhile, would want credit on their future bills," he said.

At present, Meralco has refunded P1.75 billion to active residential customers using 0-100 kilowatt-hours (kwh) under Phase I of the refund. Phase II involves customers consuming 101-300 kwh per month. Meralco has estimated gross refund amount of P4.56 billion under Phase II.

Based on ERC figures, Meralco’s first and second refund phases will amount to a total of P6.7 billion. Phase III will reach P4.9 billion while the last phase will amount to P18 billion. Bulk of the gross amount, which is estimated at P29.6 billion, will go to the commercial and industrial customers under Phase III and IV.

Meralco’s previous eight centavo per kilowatt-hour rate adjustment filed in 2001 was granted by the ERC only in May this year.