Business World Online
Posted on March 23, 2014 10:34:48 PM
A REDUCTION in pending power rate hikes, along with their timing, could result in slower inflation this year, a senior Bangko Sentral ng Pilipinas (BSP) official said.
“Both the size and the timing are important. If the size is smaller than what we assumed, then that could result in lower risks [to inflation] even as upside risks would remain,” central bank Deputy Governor Diwa C. Guinigundo said in an e-mail to reporters when asked how cuts to rate hikes sought by Manila Electric Co. (Meralco) would affect the BSP’s inflation forecasts.
“[A]ny delay in the implementation of the power adjustment, while inevitable, could result in lower inflation at least for 2014,” Mr. Guinigundo added.
Some impact, he noted, might be felt toward the latter part of this year but would be “bigger” next year.
Last Feb. 6, in trimming this year’s inflation forecast to 4.3% from 4.5%, the BSP’s policy-setting Monetary Board cited the Supreme Court’s shelving of a P4.15 per kilowatt-hour (kWh) rate hike that Meralco was to implement in tranches starting December.
During the policy meeting, monetary authorities also raised the 2015 inflation forecast to 3.3% from 3.2%.
Both revised estimates fall within the central bank’s target ranges of 3-5% and 2-4% for this year and the next, respectively.
Meralco officials last week said the deferred electricity rate hikes, including a petition to recover costs for January, would be much lower than originally set.
Hanging over consumers’ heads was a combined P9.48/kWh increase -- the P4.15/kWh being reviewed by the high court and a P5.33/kWh January adjustment pending with the Energy Regulatory Commission (ERC).
Meralco said it would now ask the ERC to approve just a P0.65/kWh increase for January based on a recalculated generation charge. It did not set a revised rate for the December rate, citing the ongoing high court review.
The distributor said the revisions followed adjusted Philippine Electricity Market Corp. (PEMC) billings for power sourced from the Wholesale Electricity Spot Market (WESM), along with “the recomputed costs for replacement power for Sual and Masinloc.”
WESM operator PEMC had adopted new prices in compliance with an ERC order after the regulator voided prices for the November and December supply months, citing market failure.
Higher prices charged by suppliers, particularly for power sourced from WESM, have been blamed for record adjustments that are being questioned by consumers.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by Philippine Long Distance Telephone Co. (PLDT).
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