MANILA, Philippines — The newly approved P0.1547 per kilowatt hour (kWh) increase in the distribution charges of utility giant Manila Electric Company (Meralco) will further boost its profitability target this year from the P12 billion it has been expecting full-year in 2010.
Additionally, in the ruling issued by the Energy Regulatory Commission (ERC) it was explicitly stated that the additional revenue stream from the its rate hike will shore up cash flow that it can utilize for its capital expenditure (capex) program. Not bad at all that the utility firm is now eyeing earnings more than what it actually aligns for capital spending to improve delivery of service.
“To enable (Meralco) to implement in a timely manner its capex program and address its operating and maintenance requirements … and avert financial
prejudice to it and its consumers, it is necessary and indispensable that a provisional authority be immediately issued authorizing it to implement the new rates pending hearing on the merits of the instant application,” the ERC has noted, referencing on the higher P1.6464 per kWh distribution tariffs wherein the utility firm was allowed to implement starting in the January billing cycle.
Nevertheless, Meralco was successful in deflecting its rate increase from public scrutiny by designing an intellectually dishonest scheme of presenting
cost-offsetting schemes from the lower generation and transmission charges which should have been to the credit of the power producers and the National Grid Corporation of the Philippines.
Questions have also been raised as to the timing on when the ERC announced Meralco’s rate increase as it can be culled from documents that the decision was promulgated as early as December 6, 2010.
With the cost offsetting schemes or stage-managing strategies being done by the utility firm, the public is being denied of the genuine information dissemination on how the performance-based regulation (PBR) works in meeting their future electricity needs.
It must be noted that the higher distribution charges will directly benefit Meralco’s coffers, hence, shoring up its profits. On the other hand, the much-vaunted lower generation charges are to the account of power suppliers (i.e. National Power Corporation,
Wholesale Electricity Spot Market and contracted independent power producers) and the transmission charge will be for system operator NGCP and designed to be revenue-neutral for Meralco.
Setting overall average for the January billing, Meralco noted that its charges to customers will still go down by P0.27 per kilowatt hour (kWh) notwithstanding its own increase of P0.15 per kWh.
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