Meralco’s staggered rate hike OK’d

AFP FILE PHOTO

MANILA, Philippines – The Energy Regulatory Commission approved on Monday the Manila Electric Co.’s (Meralco) proposal to implement the power rate increase in its franchise area in three installments.

The P4.15 per kilowatt-hour increase in power rates (including a

P3.44/kWh increase in power generation) will be distributed in the months of Dec. (P2.41/kWh), Feb. (P1/kWh), and March (P0.44/kWh).

While the increase looks small when spread over three months, in reality, it will be more costly because consumers will have to bear interest charges on the cost of managing the deferred increase.

In Meralco’s presentation before the ERC of its December generation charge and its proposed cost recovery deferment, the utility suggested three options: a) a generation charge of P7.90/kWh in its December 2013 billing and collect the deferred amount in February; b) capping the generation charge at P7.67/kWh for December and February 2014; and the third option would be distributing the charges in December, February and March.

Following the presentation, the regulator said in a letter to Meralco: “ERC is well aware of the huge impact that Meralco’s generation charge adjustment will have on the retail rates to its customers. Given that there are also reported increases in the prices of other commodities, Meralco’s proposal to stagger the implementation of its generation cost is timely, as it will cushion the impact on the electricity consumers.”

ERC then said it authorized Meralco to implement a generation charge of P7.67/kWh in its December 2013 billing and add to its calculated generation charge for February 2014 billing the generation rate of P1/kWh.

“The balance on the deferred generation amount any carrying cost shall be included in Meralco’s generation charge for March 2014. Should Meralco seek to recover its carrying costs on the entire deferred amount, it shall file a formal application for this,” ERC said. It simply means that Meralco will have to make a separate filing on the so-called carrying cost (the interest charge on the rate hike deferment).

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