The rise, approved by the Energy Regulatory Commission (ERC) late on Friday, would alleviate the loss making firm’s financial burden as it faces a court-ordered refund to customers of P30.05 billion for years of overbilling.
The increase would only apply to customers with a monthly consumption of 300 kwh and above.
"We are happy that we got an increase," Jesus Francisco, Meralco president, told Reuters in a telephone interview. "We don’t quite know yet the impact of the order on many things, like the impact on our cash flow, the impact on our rates... But it can only improve our financial position."
Francisco said the company would meet its creditors as soon as it had studied the ERC’s 45-page decision allowing it to increase rates.
The firm earlier said it may default on interest payments on short-term debt this year without a tariff hike and with the massive refunds ordered by the court in November.
Meralco had total outstanding debt of P32 billion as of end 2002.
Its debts, as well as the lack of a rate increase 1994, pushed the firm to a loss of P325.1 million pesos in the first quarter of this year, against a loss of P72.8 million in the year-ago period.
Standard & Poor’s on Thursday lowered its foreign currency rating on Meralco to CCC from B-minus with a negative outlook, saying the firm may not meet its maturing debts this year.
Aside from the refund, the Supreme Court also ruled that Meralco should reduce its rates. But Francisco said this was unlikely to happen.
"We were afraid that we might have back to roll back our rates by June...It’s not supposed to happen anymore," he said.
Militant groups have decried the approval of Meralco’s rate increase and sought the resignation of ERC chairman Manuel Sanchez and his commissioners.
The People Opposed to Warrantless Electricity Rates (power) said that the ERC order would translate to a P17.51 increase in the monthly bills of consumers who use at least 200 kwh each month.
The government, with a 25 percent share, is the single biggest shareholder in Meralco. A joint venture of First Philippine Holdings and Spanish power firm Union Fenosa owns the second biggest block of 22.86 percent.
Meralco A-shares, restricted to Filipino investors, ended 1.64 percent lower at six pesos on Friday and its B-shares, open to both locals and foreigners, lost 2.20 percent to 8.90 pesos. The Philippine key index rose 0.68 percent to 1,073.69 points. – Katherine Adraneda