P9.1-B Meralco Refund

Electric Utility Says PSALM ‘Overcharged’ Its Customers

Manila Bulletin

By Myrna M. Velasco

September 2, 2012, 7:20pm

MANILA, Philippines --- The Power Sector Assets and Liabilities Management Corporation (PSALM) is being asked by the Manila Electric Company (Meralco) to refund P9.1 billion it “overcharged” Meralco customers.

Meralco submitted the amount to be refunded to the Energy Regulatory Commission (ERC), which will rule on the petition.

The P9.1 billion covers the period from July 2008 to May 2012.

The amount involved “line loss components” of line rentals which PSALM included in its transition supply contract (TSC) with Meralco.

If approved by the ERC, the refund will mean a significant reduction in the electric bill of Meralco’s roughly 5 million customers.

In a prior ruling, the ERC indicated that “a double charging or overcharging of transmission line cost may have occurred or still occurring.” It called on Meralco to provide a calculation of the “overcharged costs.”

The ERC further said that it “also finds double charging in transmission line costs for transition supply contract (TSC) quantities for the preceding months up to the start of the WESM (Wholesale Electricity Spot Market) Luzon commercial operation on June 26, 2006.”

Meralco had complained with the regulator that it was being “double charged” by PSALM for the cost of transmission loss because a 2.98-percent transmission loss recovery was already included in the National Power Corporation (NPC) time-of-use (TOU) rates being billed its customers.

Meralco is also being charged with line rentals by the Philippine Electricity Market Corporation (PEMC) for its volume procurements from the WESM. Line rental charges include congestion cost and line losses and are paid by all market participants.

Meralco argued that its customers are entitled to a refund.

PSALM has denied it was overcharging Meralco, and argued that it should not be considered as a party in the case because it was NPC’s TSC sales that were in question.

The ERC turned down PSALM’s argument, saying it must be assume responsibility of NPC’s assets, liabilities and other obligations.

PSALM had taken over NPC as country’s the largest provider and generator of electricity. It is also the principal power provider for Meralco.

PEMC for its part, being the WESM operator, was told to segregate the line rental amounts associated with bilateral contracts to be cross-referred to WESM energy trading amounts, to clearly establish how much had been overcharged by NPC-PSALM in their TSC sales.

The ERC also wants to find out if the National Transmission Corporation (TransCo) violated provisions of the Grid Code when its San Jose-Tayabas substation went on forced outages in July 2008.

The ERC has yet to come up with final ruling on how much should be refunded to Meralco customers.     source