Meralco wants new rate hike

MANILA, Philippines - Consumers should brace for slightly higher charges from Manila Electric Co. (Meralco), which plans to recover costs absorbed in its operations last year.

The country's largest distributor wants to collect an additional 5.89 centavos per kilowatt-hour (kwh) for 12 months.

The Energy Regulatory Commission (ERC) said Meralco sought regulatory approval for the rate adjustments due to under-recoveries for generation, transmission and lifeline subsidies in January to December 2011.

"In order to prevent further accumulation of the applicant's under-recoveries, as well as corresponding carrying costs involved, to the prejudice of the applicant's customers... it is urgent that a provisional authority be immediately issued pending hearing of the instant application," Meralco said.

The rate adjustments will also prevent any troubles to electricity consumers in terms of the quality of service, Meralco added.

Meralco specifically wants to recover under-recoveries from generation (6.43 centavos per kwh totaling P1.987 billion), transmission (0.85 centavos per kwh totaling P262.15 million) and lifeline subsidies (0.14 centavos per kwh totaling P42.31 million).

However, Meralco will return 1.53 centavos per kwh totaling P474.78 million to consumers due to over-recoveries in the system loss for the entire 2011.

Hence, net increase in Meralco's rates will be 5.89 centavos per kwh.

The rate adjustments, if approved, will be in effect for 12 months in Meralco franchise areas in Metro Manila, Bulacan, Cavite, Rizal, Pampanga, Laguna, Quezon and Batangas, the ERC said.

Republic Act 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA) allows distribution utilities to recover just and reasonable costs to enable them to operate viably.

“Wholesale Electricity Spot Market (WESM) spot prices began to increase because of tight supply conditions due to the unavailability of some generating units particularly in the supply months of May to June 2011,” Meralco said.

WESM accounts for roughly five percent of Meralco's power requirements, with the rest sourced from the National Power Corp. and independent power producers.

For the under-recoveries in transmission costs and lifeline subsidies, Meralco said there is a lag in the pass on of costs.

Under the lifeline subsidy scheme, a 100-percent discount is extended to Meralco's residential customers that consume 0-20 kwh per month; 50-percent discount for 21-50 kwh, 35-percent discount for 51-70 kwh and 20-percent discount for users of 71-100 kwh per month.

Customers with low consumption enjoy lower distribution charge and a lifeline discount while larger consumers provide a lifeline subsidy and charged with higher rates.

Meanwhile, the over-recovery in system loss charge resulted from the 7.35 percent system loss in 2011, lower compared with the previous year, Meralco said.