Lower Meralco rates this month

MANILA, Philippines – Customers of Manila Electric Co. (Meralco) will enjoy a rate cut of up to 48.72 centavos per kilowatt-hour (kWh) this month, a company official said.

Meralco vice president for corporate communications Elpi Cuna said the drop could be attributed to a reduction in generation cost and systems loss charges.

For the generation charge, Meralco will implement a 42.34-centavo per kWh reduction in the June electricity bills.

Cuna noted that from its May level of P4.8754 per kWh, the generation charge this June will go down to P4.4520 per kWh.

The reduction, according to Cuna, was due mainly to the low prices obtained from the Wholesale Electricity Spot Market (WESM).

“The cost of energy that we sourced from the WESM in May was among the lowest since the market opened in July 2006. There was an almost P5 per kWh reduction in the basic cost of power, from P7.86 per kWh in April to only P2.93 per kWh in May,” he said.

“Factoring in all the adjustments, the net cost of WESM supply further went down to P1.81 per kWh in May from P7.34 per kWh in April, for a reduction of P5.53 per kWh,” Cuna added.

Meralco president Jesus Francisco, in a separate interview, said the drop in demand for the month of May, improvement in generation of some power plants and the early onset of the rainy season would bring about the lower price in WESM.

Systems loss charges for the period, he said, also went down for all customer classes.

Residential customers will enjoy a reduction of 6.38 centavos per kWh in their bills as a result of lower systems loss charges.

Combining generation charge and system loss reductions, residential customers, therefore, will see a 48.72-centavo per kWh decrease in their June electricity bills from these two components.

A lifeline customer consuming 50 kWh will see a P13.23 reduction in his electric bill this June. 

In April 2008, there were close to 700,000 customers consuming within 50 kWh. Those consuming 100 kWh who are still in the lifeline category will be billed P42.92 less this June, a six percent reduction from the May bill. 

There were 1.6 million residential customers in the lifeline category (100 kWhs or less) in April 2008.

A typical Meralco residential customer consuming 200 kWhs will pay P114.41 less this June, for a reduction in his bill of P0.5721 per kWh. 

“We have always maintained that whatever savings we incur from the cost of power we obtain from our suppliers would be passed on to our customers. The generation charge is a pass-through charge, which Meralco does not earn from,” Cuna said.

As this developed, Meralco head of utility economics Ivanna dela Peña said there would be a significant drop in electricity rates if the proposed value-added tax (VAT) zero rating for electricity will be adopted.

Dela Peña said this would result in as much as 75 centavos per kWh savings.

The Philippine Independent Power Producers Association Inc. (PIPPA) earlier proposed this as a possible measure to lower power rates instead of implementing changes in the Electric Power Industry Reform Act (EPIRA)

Monitoring the refund

The Energy Regulatory Commission (ERC) said they will strictly implement the order on Manila Electric Co. (Meralco) to refund the meter deposits of its millions of customers.

ERC executive director Francis Juan said the commission will conduct an audit on Meralco and other concerned electric cooperatives as soon as the refund process is implemented.

“We may have an audit as frequent as we want to ensure that the distribution utilities including Meralco and the electric cooperatives are complying with the guidelines of the ERC,” Juan said.

Juan said the ERC would be coordinating with the Office of the Solicitor General (OSG) to study the exit process if a meter deposit is unclaimed and forfeited in favor of the government.

“Unclaimed meter deposits will not go to the DU (distribution utility firms). We will ask from the OSG to start the exit proceeding in order to forfeit the unclaimed deposits to the state,” Juan said.

He said Meralco and other DUs will have to assign a depository bank and report to the ERC the unclaimed amount deposited as an escrow account.

“They will report to ERC to audit the implementation of the refund to check if there were either refunds that were not given or not claimed. In this way, we will find out which bank the DUs will choose for its escrow account and if ready we can have the exit process started,” Juan said.

Under the ERC guidelines, all unclaimed meter deposits, including all appropriate accrued interests, shall be deposited in an escrow account in a bank and the State, with the OSG notified of the deposit.

Juan said it will be up to the DUs to select in which bank they will deposit the unclaimed meter deposit refund.

Meralco first vice president for customer retail services Jobert Almazora said the total amount of meter deposits collected by the company as of December 2007 amounted to P1.5 billion, with interests at P1.3 billion.

Almazora said they have charged customers only half or 50 percent of the meter cost. The latest figure of meter cost of the company is P820. This means Meralco only collected around P410 meter deposit from its residential customers. This meter cost may be even lower in the previous years, according to Almazora.

The amount of meter for non-residential customers varies, Almazora explained.

He said the most expensive meter for corporate entities costs between P8,000 to P10,000.

Cut off date

Almazora said they would start a re-computation of the meter deposits based on the interest rates approved by the ERC.

He said Meralco is ready to start the refund process as soon as they have completed the documentary requirements.

“We will make an appropriate announcement on how our residential and non-residential customers can claim their respective refunds.  We can put it in their billing or post it in our offices,” he said.

ERC has approved interest rates of between six percent to 10 percent depending on the period the meter deposit was collected.

Meralco president Jesus Francisco said they would abide by the decision of the ERC.

Francisco said the refund period would depend on the cash flow of the company. 

“We need to review our figures to see how long we can undertake the refund,” he said.

Based on ERC guidelines, DUs including Meralco have at least 66 months to carry out the refund. After this prescribed period, all unclaimed refund will have to be put in an escrow account in a bank to be chosen by the DU.

“We may have the refund ahead of that deadline imposed by the ERC,” he said.

Meralco clarified that since June 2004, they have stopped collecting the meter deposit. This means residential customers that had their meters installed after June 2004 will not have any refund.

“Meralco has ceased charging for meter deposits since the Magna Carta for residential electricity consumers and the Distribution Services and Open Access Rules (DSOAR) for non-residential customers were implemented in 2004 and 2006, respectively,” Almazora added.

As this developed, a group of lawyers who claimed to represent three million consumers announced plans to file a class suit against Meralco, ERC and the National Power Corp. (Napocor), so customers may be refunded unauthorized electricity charges.

Jose Malvar Villegas said their group would be filing the class suit before the Makati City Regional Trial Court on behalf of at least 10 pauper litigants from Manila and neighboring provinces.

“The civil suit will also seek court action for accounting, issuance of temporary restraining order, permanent injunction and refund of illegally charged assessment and billings unjustly imposed upon millions of consumer all over the Philippines,” Villegas said.

He said they included ERC and Napocor in the charges for conniving with Meralco in imposing the illegal charges to consumers.

Villegas said lawyers Rod Domingo, Oliver Lozano, Vicente Millora, Pete Principe, Leonard de Vera and anti-crime groups Citizen Crime Watch and the Volunteers Against Crime and Corruption (VACC) will assist the pauper litigants in pursuing the case.

According to Villegas, the case represents the claim of every consumer who is entitled to at least P80,000 in refund.

Relief

The state-owned Land Bank of the Philippines (Landbank), meanwhile, started yesterday distributing the P500 cash to the public as subsidy to small electricity consumers.

Landbank vice president for corporate affairs Agustin Apilado said the government, particularly the Department of Social Welfare and Development (DSWD), has set aside a total of P2 billion to subsidize four million small electricity consumers.

Those consuming 100 kilowatt-hours and less can avail of the subsidy, Landbank said.

Landbank branches in Buendia, Intramuros, Batasan, Quezon Avenue and Pasig City started the distribution of the P500 subsidy yesterday, Apilado said.

Apilado announced that starting today, subsidies could be claimed from 62 branches of Landbank in Metro Manila.

Consumers are required to present their April to May billing statements and one valid identification card with photo to avail of the subsidy.

President Arroyo provided the one-time P500 subsidy to help small consumers pay their electricity bills.

This is part of government efforts to help the poor cope with the rising costs of power and other expenses.

The subsidy will come from the expected P18.6-billion windfall from the controversial value added tax (VAT) on oil this year.

Aside from the subsidy, the government is also set to provide a fuel subsidy to public utility vehicle (PUV) drivers amounting to P3 billion every quarter.

The subsidy may be in the form of a P2-per-liter discount for PUVs although its implementing guidelines are still being finalized.

The Department of Finance (DOF) is in favor of granting a subsidy to the various sectors using the revenues from VAT on oil instead of scrapping the tax itself as many cause-oriented groups and some lawmakers are suggesting.

The DOF estimates that the government will lose directly P45.7 billion in revenues yearly if VAT on oil is suspended. –With Iris Gonzales, Perseus Echeminada