Meralco customers should expect bump in bills

By Lenie Lectura - September 7, 2017
http://www.businessmirror.com.ph/cusi-to-erc-bare-clear-cut-bidding-rules-on-p52-billion-vismin-power-grid-project/

Energy Secretary Alfonso G. Cusi on Thursday said he wants the Energy Regulatory Commission (ERC) to issue clear-cut guidelines on the bidding rules involving a multibillion grid interconnection project.

“I asked ERC for the bidding guidelines to be very clear. The guidelines should be laid down by the ERC. I want the consumer groups, the Commission on Audit [COA] and the National Transmission Corp. [Transco] to be part of the Bids and Awards Committee [BAC],” Cusi said.

This, after the ERC issued a provisional authority (PA) to the National Grid Corp. of the Philippines (NGCP) to proceed with its P52-billion Visayas-Mindanao Interconnection Project albeit with conditions.

For one, the proposed project shall be subject to optimization based on its actual use and/or implementation during the reset process for the next regulatory period; NGCP is required to conduct competitive bidding for the purchase of major materials in the implementation of the project; and NGCP’s payment of the permit fee.

“We must exercise transparency in the conduct of the bidding because it will be the consumers who will eventually pay,” Cusi said.

The project involves the interconnection of the Visayas and Mindanao via Cebu and Zamboanga. The converter stations in the Visayas and Mindanao will be in Sibonga, Cebu, and Aurora, Zamboanga del Sur, respectively. The project is estimated to be completed in 46 months with an estimated cost of a less than P52 billion.

The Visayas-Mindanao interconnection Project is in support of the government’s vision to interconnect the major grids into a single national grid, which is expected to help improve the overall power-supply security in the country as sharing of reserves will already become possible.

The project also aims to reinforce the operation of the electricity market by maximizing the use of available energy resources and additional generation capacities in the Visayas and Mindanao, which include the renewable-energy resources.

“The provisional approval granted to NGCP to implement the Visayas-Mindanao Interconnection Project will enable power-supply importations among the Luzon, the Visayas and Mindanao grids. For instance, the deficiency of supply in [the] Visayas may be supplied by importing power from Luzon or Mindanao. Hence, this Visayas-Mindanao interconnection will help address the insufficient power supply and will also help optimize the available power supply in the Philippine grid,” ERC Officer in Charge Alfredo J. Non said.

Electricity rates are on the rise this month after overall generation charge for the August supply month went up mainly on account of higher spot-market prices and the continued depreciation of the peso.

The Manila Electric Co. (Meralco) on Thursday said power rates increased by P0.8642 per kilowatt-hour for a typical residential household, thereby bringing the overall rate from last month’s P8.3849 per kWh to P9.2491 per kWh this month. This will be equivalent to an additional P173 in the total bill of a household consuming 200 kWh. The said rates, Meralco said, returned to pre-refund levels after completion of the refund of over-recovery on pass-through charges from January 2014 to December 2016, totaling around P6.9 billion.

Meralco’s petition for refund with prayer for provisional authority was granted by the Energy Regulatory Commission (ERC) on May 11, for implementation from June to August 2017. The refund was not shown as a separate line item in the bill, but was reflected as reductions in the different pass-through charges of the bill, which include generation, transmission, and system loss charges and lifeline and senior citizen subsidies.

For residential customers, the refund translated to a monthly reduction of around P0.88 per kWh, including taxes.

A typical residential household consuming 200 kWh enjoyed a total bill reduction of almost P530 over the three-month period.

Overall generation charge, which is the largest component of an electricity bill, increased this month by P0.5615 per kWh to P4.5378 per kWh, from P3.9763 per kWh in August. The August generation charge incorporated a reduction of P0.5355 per kWh, representing the refund approved by the ERC.

Purchases from the Wholesale Electricity Spot Market (WESM) increased by P1.7263 per kWh, as prices in the spot market increased due to higher power demand in the Luzon grid. The cost of power from power supply agreements (PSAs) also registered a slight increase of P0.0263 per kWh, mainly due to the peso depreciation and lower plant dispatch. The shares of WESM and PSAs this month stood at 12 percent and 42 percent, respectively.

Meanwhile, despite the weakening of the peso, the cost of power sourced from the independent power producers (IPPs) decreased by P0.1117 per kWh due to improved dispatch of First Gas-Santa Rita after undergoing scheduled maintenance in the preceding month. The share of IPPs this month stood at 46 percent.

Transmission charge of residential customers decreased by P0.0510 per kWh, and taxes and other charges have also gone up by P0.3537 per kWh.

Meralco’s distribution, supply and metering charges, meanwhile, have remained unchanged for 26 months after registering reduction in July 2015. Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the National Grid Corp. of the Philippines.