Meralco chops rate hike by 90 percent

Business Mirror
20 Mar 2014 
Written by Butch del Castillo 

THE Manila Electric Co. (Meralco) on Thursday filed a revised petition with the Energy Regulatory Commission (ERC) that effectively reduces by up to 90 percent the outrageously high power-rate increases it almost passed on to its 5.3 million customers last December and in January. 
That petition was based on its own recalculations after the ERC itself said Meralco should be collecting only an additional 40 to 50 centavos per kilowatt-hour (kWh), instead of P4.15 per kWh and P5.56 per kWh it earlier approved. 
The increases pertain to the generation-rate component of Meralco’s monthly billings for December 2013 and January 2014 as a result of the 30-day maintenance shutdown of the Malampaya gas platform late last year. 
Meralco said, however, that it would still have to wait for the decision of the Supreme Court (SC) on the legality of the December increase. 
It was this first shocking increase that was angrily questioned by several advocacy and consumer groups before the High Court last December. 
The flurry of petitions prompted the SC to issue two consecutive 60-day temporary restraining orders against the imposition of the ERC-approved rate increases. 
A highly reliable source said the SC, which is not a “tryer of facts,” would most likely remand the case to the ERC, with the admonition that its mandate under the Electric Power Industry Reform Act of 2001 (Epira) is to protect the interest of electricity consumers from predatory pricing practices. 
In short, it would allow the ERC to clean up its own mess by itself. 
The source said the High Court would likely order the ERC to do its job as mandated by law, instead of passing it on to the SC, and find out for itself what the just and equitable generation-rate increases should be. 
Meralco Senior Vice President and Chief Finance Officer Betty C. Siy-Yap said once the revised Meralco petition is approved, the increase for last December would only be P0.2715 per kWh, instead of the original P3.44. 
The increase for January would be P0.4507 per kWh from its original estimate of P4.5006. But it must have been precisely in anticipation of the SC decision that the ERC declared a “market failure” at the Wholesale Electricity Spot Market (WESM), whose clearing prices were used as bases for the rate increases sought by Meralco. 
In declaring a market failure, it effectively voided the original clearing prices that were used as bases for the ludicrously high rate increases demanded by the generation companies. 
At this point, there seems to be no question that the ERC would approve the greatly reduced generation-rate increases sought by Meralco in its revised petition. 
The Meralco calculation is closer to the administered WESM price of the ERC than what was announced by the Philippine Electric Market Corp. (PEMC), which runs the WESM. 
Early this month the ERC ruled that the increase in WESM prices during the November-to-December 2013 period were unjustified and, therefore, invalid. 
It also ordered the PEMC to recalculate the prices based on a 12-month average preceding the Malampaya shutdown. 
The PEMC said the recalculated figures should go down by half the original quotes, but Meralco said its own calculations show much lower figures. 
Meralco’s own calculations showed that the increased generation charge should be only a tenth of the original amounts being claimed before these were voided by the ERC after declaring a market failure at the WESM. 
Meralco said the generation charge should be reduced from the original P3.44 per kWh to only 27 centavos for the December bill. 
For the January bill, the generation rate increase should be slashed from the original P4.56 per kWh to only 45 centavos per kWh, the utility firm added. 
For the first time in its existence since it was created under the Epira, the ERC seems to have, at last, begun to function as an independent regulatory body. 
But the millions of grateful electricity consumers are hoping that this favorable turn of events is not just a flash in the pan. 
They are hoping that the ERC would, henceforth, stay on its newfound course and consistently use its regulatory powers to protect the public from any future attempt at predatory pricing from greedy industry players. source