‘Power rates may go up by P7 per kwh’

A consumer advocacy group said yesterday electricity rates may go up by as much as P7 per kilowatt-hour by February next year if the Energy Regulatory Commission (ERC) approves all pending rate hike petitions of the Manila Electric Co. (Meralco), the National Transmission Corp. (TransCo) and the National Power Corp. (Napocor).

The scenario was raised at a press conference by Consumer and Oil Price Watch (COPW) chairman Raul Concepcion.

Concepcion, who has been monitoring power rate movements, said Meralco has three pending rate hike applications with the ERC.

He said that if rate hikes are inevitable, these should at least be made on a staggered basis.

"If we have to do it (increase), it should be staggered. Or maybe P1 every six months. That is if the ERC approves the pending petitions," Concepcion said.

Meralco, he said, has one rate hike application with the ERC seeking a P0.6314 per kwh increase. The other two applications call for an increase of P2.1716 per kwh and P2.9895 per kwh. The total increase being sought by Meralco, if approved by the ERC, is P5.7925 per kwh.

Based on the COPW data, Napocor is seeking a rate adjustment for the recovery of incremental fuel and independent power producers’ costs. The rate increases are: P0.4675 per kWh in Luzon grid; P0.4196 for Visayas and P0.5560 per kWh for Mindanao.

On top of this, Napocor is also applying for the recovery of costs incurred on foreign exchange losses. The cost recovery, Napocor said, requires an increase of P0.6179 per kWh; Visayas, P0.2605 per kWh; and Mindanao, P0.0237 per kWh

Concepcion noted that for the rate hike petitions of Napocor and Meralco alone the percentage increase from current rate would be 88.75 percent. As of September 2006, the electricity rate in Meralco franchise area is P7.75 per kWh.

Aside from Meralco and Napocor, Concepcion said TransCo may also contribute to the increase in power rates in the next two months.

He said TransCo has pending applications for increase in maximum allowable revenue; recovery of performance incentive; recovery of stranded contract costs and stranded debts and recovery of costs incurred to force majeure events.

Other events that would affect the rates in the coming months, he said, would be the shutdown of 1,200 MW Sual coal-fired power plants.

As a power sector watchdog, the ERC is mandated to hear and decide on any recovery or pass-through in the generation, distribution and transmission costs of power distribution firms.

The ERC can reduce or increase the cost being recovered, depending on the justifications raised by the applicants.

But in most cases, the rates approved by ERC are lower than the rates requested by power firms.

Some of the rate increase applications, Concepcion clarified, have already been charged by TransCo, Napocor and Meralco.

"These applications will be subject to public hearings. Some of these rate increase applications were just recovery of the costs that were already advanced by the power distribution companies," he said.

Concepcion said the privatization of the generating assets of Napocor would soften the impact of the huge power rate adjustments.

"If the government will be out of this business, it will not have the burden of paying all Napocor debts," he said.