Meralco says no definite date for distribution rate increase

Manila Electric Co. (Meralco) has assured its customers that it will not yet increase its distribution charge next month. 

Meralco vice president for corporate communication Elpi Cuna Jr. said they still have to submit a mechanism on how to implement the rate adjustment in its distribution fee based on the performance-based rate (PBR) scheme approved by the Energy Regulatory Commission (ERC) late last year. 

“We are only filing this week the set of rate schedules that will implement ERC’s decision on our performance-based rate (PBR) application. The application, which will be published, will undergo public consultation and ERC approval before it can be reflected in our billings,” he said. 

In August 2007, the ERC approved  its final determination on the PBR application of Meralco.  

Due to motions for reconsideration and clarifications it filed with the ERC on the decision, Meralco was not able to file the appropriate rate structure last Oct. 15, 2007.  

But Cuna admitted that “had the original schedule been followed as indicated in the Aug. 31 decision, the implementation of the PBR-based rates would have been (effective) this February 2008.” 

Meralco, along with Cagayan Electric and Dagupan Electric, were the first among the private distribution utilities (DUs) to shift into PBR, an internationally-accepted rate making methodology.  

Under PBR, the rates of DUs are set based on four-year projections of capital expenditures and operating expenses and a prescribed weighted average cost of capital (WACC).  

“There are also technical and service standards that the DUs have to meet. With this shift in the rate-setting methodology, consumers can expect a higher level of service,” Cuna added.  

“As we have always emphasized, we cannot unilaterally increase our distribution charge without the regulator’s approval,” he said.  Once the ERC approves the PBR mechanism to be submitted by Meralco, the rates for the distribution charge of Meralco will increase from eight centavos to 10 centavos for the period 2008 to 2011.