Power hike shocks users

By: Riza T. Olchondra - 11 years ago

A three-month installment plan starting this month for the biggest ever rate increase of P4.15 per kilowatt-hour by Manila Electric Co. (Meralco) is still staggering for consumers clamoring for a reprieve amid recent price hikes in various commodities. INQUIRER FILE PHOTO

The increases will be P2.41 per kWh in December, P1.21 in February and 53 centavos in March, according to Meralco.

While the installments look relatively small, the real impact could be bigger because consumers will bear interest charges on the cost of managing the deferred increase.

“The increase per month seems small. So that’s good. But if I will still have to pay everything in the end, it would still be a burden,” said Edwin Samson, who operates a sari-sari store in one part of his modest home.

“I will probably stop using lights in my house, maybe even the radio. I can’t stop using the lights, electric fan and refrigerator in the store,” he said.

The higher generation charges stem largely from the maintenance shutdown of the Malampaya gas field from Nov. 11 to Dec. 10, prompting Meralco’s supplier power plants (Sta. Rita, San Lorenzo and Ilijan) to use more expensive fuel.

The value-added tax (VAT) and other fees that adjust to the power generation rate pulled up the total increase from P3.44/kWh to P4.15/kWh.

With the approval of the Energy Regulatory Commission (ERC), Meralco will implement its highest power rate increase in December, February and March.

The increase when added to last month’s generation charge of P5.6673/kWh would have resulted in a power generation charge of P9.1070/kWh this month without the staggered implementation.

For a typical household using 200 kWh a month, a one-time increase of P830 would have pushed its monthly bill from P2,212 to P3,041.48.

Third option

Meralco and the ERC reached an agreement on the implementation of the staggered payments at a meeting on Monday.

In Meralco’s presentation to the ERC of its December generation charge and its proposed cost recovery deferment, the utility firm suggested three options:

— Setting a generation charge of P7.90/kWh in its December billing and collecting the deferred amount in February.

— Capping the generation charge at P7.67/kWh for December and February; and

— Distributing the charges in December, February and March.

The ERC endorsed the third option. ERC Executive Director Saturnino C. Juan said the third option reflected the smallest increase per month.

Following the presentation, the regulator said in a letter to Meralco: “The ERC is well aware of the huge impact that Meralco’s generation charge adjustment will have on the retail rates to its customers.

Cushion impact

“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.”

The ERC then said it authorized Meralco to implement a generation charge of P7.67/kWh in its December 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,” the ERC said.

This means that Meralco will have to make a separate filing on the so-called carrying cost (the interest charge on the rate hike deferment).

Still unacceptable

Pete Ilagan, president of National Association of Electricity Consumers for Reforms Inc., said the rate increase was still unacceptable.

Bayan Muna Rep. Carlos Isagani Zarate said the ERC-Meralco meeting appeared to be a ploy to preempt the House investigation of the huge rate increase set Tuesday.

“At any rate we will try to get to the bottom of this proposed rate increase and we will do all we can to stop it,” Zarate said.

Picket at ERC

Militant groups staged a picket in front of the ERC while the agency was hearing Meralco’s presentation.

The groups, which included Bukluran ng Manggagawang Pilipino, Gabriela, Anakpawis and Kongreso ng Pagkakaisa ng Maralita ng Lungsod (KPML), denounced what they said was Meralco’s “corporate greed” and the ERC’s supposed connivance with the power utility.

“The ERC just accepted Meralco’s proposal as if it were the firm’s spokesperson,” said KPML head Gie Relova.

Relova said he and around 70 members of the group trooped first to the Meralco offices in Caloocan and Quezon City on three vehicles before reaching the ERC headquarters in the Ortigas area before noon.

An Anakpawis placard called for the repeal of the Electric Power Industry Reform Act (Epira), which the group said liberalized and privatized the power industry to the point that corporations like Meralco were able to increase power rates “at their own whim.”

Relova said the power rate hike was “not justified,” especially since many areas hit by Supertyphoon “Yolanda” were still under reconstruction.

“Epira is the mother of all evils,” he said.

Mitigating measures

The Philippine Chamber of Commerce and Industry reserved its comments as it called for an emergency meeting on the power rate hike on Wednesday.

There have been calls to tap the Malampaya Fund to cushion the impact of the power rate hike, despite earlier appeals to use the fund for survivors of Yolanda.

Ivanna de la Peña, Meralco first vice president and regulatory affairs head, said the increase could have been worse without mitigating measures.

To temper the increase, Meralco entered into a power sales agreement with Therma Mobile Inc. as other suppliers were not willing to sell on a short-term basis to Meralco.

The power utility also coordinated with power suppliers to manage costs and encouraged end-users to be more energy

efficient, she said.

Meralco gets more than 50 percent of its electricity (for distribution) from plants that use gas from Malampaya. The company also gets 11 percent of its power from providers in the Wholesale Electricity Spot Market, where rates have increased due to tight supply amid scheduled and emergency power plant outages in the Oct. 26-Nov. 25 supply period.

The cost of power generation in this period was supposed to be reflected in the December billing of Meralco, which was supposed to be issuing notices to consumers.

Timing of outages

However, Meralco officials said they had deferred the billing by about a week because it first wanted ERC guidance on the staggered payment of the increase.

Asked whether Meralco saw anything wrong with the timing of power plant outages, Meralco president Oscar Reyes said: “We have no reason to suspect power generators. We were also conscious of not contracting too much capacity since that also finds its way into the power rates.”

It has also been pointed out that while the generation charge does not go to Meralco, the utility firm has posted huge profits over the past few years.

The publicly listed company, the country’s biggest power retailer, earned P16.30 billion (in core net income) in 2012, up 133 percent from the P7 billion in 2009.

Meralco’s franchise area covers 31 cities and 80 municipalities in Metro Manila, the entire provinces of Bulacan, Rizal and Cavite; parts of the provinces of Laguna, Quezon, Batangas and Pampanga.

The service area produces

almost 46 percent of the country’s gross domestic product.

Leave of absence

For her part, ERC Chair Zenaida Ducut said she had not received a formal charge on allegations that she was involved in the P10-billion pork barrel scam of businesswoman Janet Lim-Napoles.

Lawmakers have called on Ducut to take a leave of absence or to step down.