MANILA, Philippines — Power giant Manila Electric Co. has secured regulatory support for a mitigating measure aimed at cushioning the expected spike in electricity rates this month amid the ongoing global oil crisis.
The Energy Regulatory Commission (ERC) backed Meralco’s proposal for the earlier implementation of the line rental cap provision in its power supply agreements, which applies to transmission-related system loss charges.
Traditionally, the line rental cap is implemented in the succeeding billing month. However, Meralco proposed enforcing the cap immediately this month to help soften the impact of higher generation costs on consumers.
Line rental costs, which are passed on to consumers, reportedly surged following the ERC’s earlier suspension of electricity spot market operations.
Under the line rental cap, generation companies will only be allowed to pass on a limited portion of these costs to consumers, with any excess to be absorbed by the power producers themselves.
Meralco had initially projected an increase of around P1.0277 per kilowatt-hour (kWh) in generation charges for the May billing period.
With the proposal in place, the projected increase could be reduced to about P0.435 per kWh, according to the ERC.
“We understand the burden that rising electricity prices bring to Filipino households, especially during periods of global uncertainty and increasing fuel costs,” ERC chairman and CEO Francis Saturnino Juan said.
“The ERC continues to work closely with distribution utilities and other industry stakeholders to identify measures that can help reduce the impact on consumers,” he added.
Generation charges, which cover the cost of power procured by Meralco from suppliers, account for more than half of consumer bills.
“While some costs are driven by international fuel prices and market conditions beyond domestic control, the ERC remains committed to ensuring that all charges passed on to consumers are properly reviewed, transparent and reasonable,” Juan said.
Meralco, which serves Metro Manila and nearby provinces, is expected to announce its electricity rate adjustments for the May billing period today.