Time-of-use pricing scheme to boost Meralco finances considerably

The finances of the country’s biggest power distributor, the Manila Electric Co. (Meralco), will improve considerably once it applies its time-of-use (TOU) electricity pricing scheme.

The TOU pricing scheme is similar to the same pricing method telephone companies and Internet service providers are using: higher rates are charged at daytime when usage is high and lower rates prevail at night when usage is lower.

Based on Meralco’s TOU application submitted to the Energy Regulatory Commission (ERC), the power firm will collect incremental metering and supply charges that will be on top of the time-fee for the installation of new meters to capture meter readings from the different TOU time zones.

Analysts noted that from these incremental metering and supply charges alone, Meralco could generate revenues ranging from P16.4 billion yearly during the first phase of the implementation, to a high of P26.2 billion in the final phase that will cover its entire franchise area.

In addition, residential customers using single-phase meters will be shelling out a one-time fee of P2,100 and P3,270 for customers using three-phase meters. For commercial and industrial customers, the one-time application fee would be P3,270.

Aside from these, there is an incremental recurring monthly metering charge of P120 a month and a variable charge of six centavos per kilowatthour (kwh) for single-phase customers, P1,180 and a variable charge of 9 centavos per kwh for three-phase meters; and P1,686 and a variable charge of 0.08 centavos per kwh for commercial and industrial customers.

There is also an incremental supply charge of 8.48 centavos per kwh for all residential customers and a fixed P875.52 charge for commercial and industrial customers.

Earlier, industry analysts noted that Meralco’s petition with the ERC for the TOU pricing scheme is considerably higher compared to what the regulator approved last April for the state-run National Power Corp. (Napocor).

Meralco buys about 40 to 50 percent of its power requirements from Napocor while the rest is supplied by its own independent power producers (IPPs) owned by affiliates First Gas and Quezon Power.

The power firm specified three different TOU generation rates, which it said reflect the cost of power it buys from Napocor and its IPPs.

These are two peak rates of P6.5754 per kwh for the first semester and P6.1565/kwh for the second semester and a year-round off-peak rate of P3.1086/kwh.

In contrast, Napocor’s TOU rate structure as approved by ERC comprises a four-tiered peak rate structure – P5.0799, P5.3108, P5.5190 and P6.061/kwh. Napocor also has four off-peak rates – P1.8744, P2.0340, P2.1574, and P2.7192.

The specific hours during which the rates are being charged by Napocor to electric distributors and its directly connected customers differ during the first semester and the second semester. Peak rates are from 9 a.m. to 9 p.m. during the first semester and from 10 a.m. to 9 p.m. during the second semester. Its rates are also lower during Sundays.

Analysts noted that using the Monday to Saturday rate structures, the difference between Napocor’s and Meralco’s TOU pricing structure is on the average about 94.6 centavos.