Meralco’s 17¢ rate hike OK’d

With consumers still reeling from high oil prices, the Energy Regulatory Commission (ERC) has approved a 17-centavo rate increase application of the Lopez-controlled Manila Electric Co. (Meralco).

In an order dated Aug. 20, the ERC gave Meralco the go-signal to charge the new generation rate of P0.1737 per kilowatt-hour (kwh) starting September.

This is the third time since the inception of the Generation Rate Adjustment Mechanism (GRAM) that Meralco applied for a revision in its generation costs.

The change in Meralco’s generation rate is intended to allow the firm to recover its carrying charges under the Deferred Accounting Adjustments (DAA).

But the ERC said the carrying charge adjustments were tempered by the downward trend in generation cost during the test period covering the months from February to May 2004.

ERC chairman Rodolfo Albano Jr. was quick to point out that the increase merely reflects Meralco’s recovery of the "cost of power it purchased" from its suppliers.

"Meralco is merely collecting from its customers the reasonable cost imposed upon it by its power suppliers. This doesn’t give Meralco additional income. The GRAM is a recovery mechanism on the cost of power it purchased," he said.

Under Republic Act 9136, or the Electric Power Industry Reform Act (EPIRA), a power distribution utility can adjust its GRAM every quarter.

The Lopez-controlled power firm has a pending motion with the Court of Appeals on a decision stopping it from imposing the unbundled 17 centavos per kWh charge approved by the ERC last May 2003.

In compliance with a Supreme Court order in November 2002, the company is in the midst of refunding the P30 billion that it overcharged customers from September 1994 to May 2003. The SC also stopped the firm from charging a 12 centavo per kWh increase under a GRAM application approved by the ERC in November 2003.

Meralco started charging its unbundled rates in its June 30 billing to comply with a May 30, 2003 order of the ERC.

In rate unbundling, the generation charge, transmission charge, currency exchange rate adjustment (CERA), distribution charge, line loss charge, lifeline subsidy and power factor adjustments are enumerated in a customer’s billing statements.

Under its unbundled rates, Meralco also provides for graduated discounts to residential customers consuming less than 100 kWh per month, which the ERC considers as lifeline users. As of April 2003, these customers reached 1.33 million, representing 34 percent of Meralco’s 3.96 million customer base.

Residential users consuming from 51 to 70 kWhs get a monthly discount of 35 percent while those consuming from 71 to 100 kWhs get a 20 percent discount on their monthly bill.

The approved unbundled charges no longer include an income tax component and also stops Meralco from collecting the controversial purchase power adjustment (PPA).

On March 22, 2003, the ERC approved a 5.5 centavo increase in the unbundled rate but Meralco filed an appeal, prompting the commission to review its decision.

On May 30, 2003, the ERC came up with a new order increasing the unbundled rate generation charge of Meralco to 8.65 centavos per kWh but applied the increase only to customers consuming more than 301 kWh. The rate is substantially lower than the P1.12 per kWh unbundled rate petition of Meralco.