Meralco Also Adjusting Power Charges

Manila Bulletin
By MYRNA M. VELASCO
March 31, 2012, 4:07am


Manila, Philippines - Apart from the nationwide increases in the generation charges of the National Power Corporation (NPC), power utility firm Manila Electric Company (Meralco) announced that it will also be increasing its charges by up to P0.0476 per kilowatt hour (kWh) for its local franchise tax recoveries.


The total franchise taxes to be recovered by Meralco from customers would be P1.58 billion, which it paid to various provinces and cities within its franchise area.


These include the provinces of Bulacan, Batangas, Cavite, Laguna and Rizal; while the cities are San Jose del Monte, Batangas, San Pablo, Tagaytay, Lucena, Mandaluyong, Marikina, Quezon, Caloocan, Pasay, Las Piñas, Manila, Calamba and Pasig.


Based on the ruling of the Energy Regulatory Commission, the amount to be recouped by Meralco will range from P0.0007 to P0.0476 per kWh.


"This recovery, which covers the years 1994-2004, will only be reflected in the customers’ bills starting this May," the utility firm has noted in a press statement.


Meralco qualified that "the decision came after several years of regulatory evaluation and the conduct of hearings beginning December 10, 2001, when the company asked the regulator for authority to adopt a local franchise tax adjustment clause."


It added that "the decision covers local franchise tax payments by Meralco to LGUs from as early as 1993." The ERC has emphasized that local franchise taxes "are legitimate expenses, which the law allows to be recovered from the customers."


On the hike in NPC’s rates, Meralco underscored that the P0.69 per kWh for Luzon will be "diluted" in the final pass-on rate to its customers.


"Meralco customers will not feel the full impact of the adjustment," Meralco utility economics head Lawrence Fernandez said.


He further explained that "the NPC increase will be diluted to only about P0.28 per kWh for Meralco residential customers" since the distribution utility sources just about 40-percent of its supply from NPC.


Fernandez similarly noted that when Meralco’s bilateral power supply contracts with the private generators will already be approved by the ERC, the pass-on impact of the NPC rate adjustments would be eased further.


"Until the new bilateral contracts are approved by the ERC, the TSCs (transition supply contracts) assigned to them were extended, so the ERC-approved NPC rate will apply in the meantime," Fernandez said.


The cost mitigating effect of the NPC adjustments, he expounded, is partly due to Meralco’s strategy of diversifying its power supply procurement.


"Meralco sources its power requirements from several generators, with NPC being one of them," Fernandez noted, adding that the company tries to "come up with strategies to obtain the right mix of power from these different sources that will result in the most reliable and reasonably-priced power for our customers."