MANILA, Philippines--The Manila Electric Co. said on Saturday the cost of electricity will likely increase if it accedes to suggestions that it pay for the electricity it uses instead of recovering the cost as part of the systems-loss charge to customers.

Ivanna Dela Peña, the distribution utility's vice president for utility economics, said all businesses pass on the cost of electricity to customers as part of the companies' operating costs.

"It just so happened that in Meralco's case as in that of other distribution utilities and generation companies, what we have to sell is also electricity," Dela Peña said at the weekly Kapihan sa Sulo news forum.

Dela Peña said the implementing rules and regulations of the Anti-Pilferage Act of 1994 allow distribution utilities to use one percent of the total power purchased from generation firms and pass on the cost to customers.

She said billing Meralco for its consumption will compound the cost with metering charges, government taxes and other fees factored in.

"Instead of billing ourselves and billing ourselves with distribution supplier metering that was not incurred and the taxes, the consumers will incur a higher cost. So we just offset (this cost through the systems loss charge)," Dela Peña added.

Dela Peña said it was an international practice that electricity used by distribution companies is recovered by passing on the cost to consumers.

She said that in the Philippines the IRR of the anti-pilferage law places a limit on how much of the cost of electricity may be recovered.

The limit she said is the company's actual use or one percent of the total power purchased by the distribution utility, whichever is lower.

Dela Peña said that in 2007, Meralco used only 0.27 percent of the one percent allowed by law for its use and recovery of cost. This amounted to 77 million kilowatts.

"People think this is just the electricity used in the air-conditioning of the Meralco center," Dela Peña said. "But this also includes the (electricity used in our) control center, call center, computers, branch offices and operating centers... covering 9,337 square kilometers of service area," she added.

This was needed "to serve our customers 24-7," she said.