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Meralco to implement staggered hike in generation charges

Linemen of Manila Electric Co. fix electric posts in Tondo, Manila in this file photo. — PHILIPPINE STAR/ RUSSELL PALMA

THE ENERGY Regulatory Commission (ERC) has approved the proposal of Manila Electric Co. (Meralco) to stagger the collection of an estimated P1.1 billion in generation charges over the next two months to cushion its impact on consumers.

In a Viber message, ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said the regulator had no objections to Meralco’s request to defer the collection of the higher generation charges incurred for February.

“In its letter, Meralco advised that the deferral of P1.1 billion will result in an increase of P0.62/kilowatt-hour (kWh) in its total rate for March and April 2023. This total rate is less than the expected increase of about P0.92/kWh plus other adjustments for VAT (value-added tax) and systems loss for the February supply month,” the ERC said in a separate statement.

The regulator said a typical Meralco residential customer consuming 200 kWh will see a total rate increase of P1.11/kWh, when other billing components, such as systems loss and taxes, are included.

A Meralco representative said in a Viber message that it proposed the staggered collection of the generation charges after seeing a “significant increase based on initial computations.”

“We asked our suppliers to defer collection of portions of their generation costs. Our proposal is to collect these deferred costs over the next two months to help bring down this month’s generation charge increase,” Meralco said.

Meralco said the higher generation charge was mainly due to the maintenance shutdown of the Malampaya gas production facility from Feb. 4 to 18. During the two-week shutdown, power plants supplied by Malampaya ran on more expensive alternative fuels to ensure continuous power supply.

“We coordinated with our suppliers and the ERC for the deferral of a portion of the generation costs for the February supply month. This will help us bring down the generation charge increase in the March billing period to the benefit of our customers,” it added.

However, the ERC said that it will still validate the proposed increase if it complies with the power supply agreements (PSA) and the fuel pass-through structure.

Meralco also attributed the increase in generation charges to the spike in the Wholesale Electricity Spot Market (WESM) prices.

Latest available data from the Independent Electricity Market Operator of the Philippines show that spot market prices increased by P1.67 to P7.43/kWh from P5.76/kWh in January.

For the February supply period, Meralco has secured an emergency power supply agreement (EPSA) with Aboitiz Power Corp.’s GNPower Dinginin Ltd. Co. (GNPD) covering 300 MW of supply. This deal with GNPD has a full fuel pass-through structure with an implemented rate of P8.53/kWh.

Meralco’s decision to secure an EPSA came after its 670-MW power supply deal with South Premiere Power Corp. (SPPC), the administrator of the gas-fired power plant in Ilijan, Batangas, was subjected to a writ of preliminary injunction issued by the Court of Appeals (CA).

The 670-MW contracted capacity is supposed to be covered by Meralco’s PSA with SPPC, which was agreed upon in 2019 for a period of 10 years at P4.2455/kWh.

Meanwhile, Ms. Dimalanta also said that the commission will stick to its initial plan to defer the recovery of P22.64 billion in generation costs until the second half of this year.

To recall, the Supreme Court upheld in July the ERC’s order in 2013 allowing Meralco to implement a staggered power rate hike for the recovery of the generation costs.

The staggered rate increases also came after the shutdown of the Malampaya gas operations and the scheduled maintenance of power generation plants.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by Philippine Long Distance Telephone Co. (PLDT). Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Ashley Erika O. Jose

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