MM power rates up; ERC orders audit of refund

By Jed Macapagal - January 11, 2021
https://malaya.com.ph/index.php/news_business/mm-power-rates-up-erc-orders-audit-of-refund/

Power rates in Metro Manila will go up by P0.2744 per kilowatt hour (kWh) this month according to the Manila Electric Co. (Meralco), as generation charges were pushed up by lower demand for electricity in Luzon.

This developed as the Energy Regulatory Commission (ERC) to verify whether Meralco’s reported refunds have been fully accounted for and returned or credited to customers’ accounts.

The upward rate adjustment will be equivalent to an increase of around P55 in the bill of a residential customer consuming 200 kWh monthly and brings overall power rates to P8.7497 per kWh from last month’s P8.4753 per kWh.

From last month’s generation charge of P4.1516 per kWh, January 2021’s generation charge is at P4.4574 per kWh.

Meralco said demand for power in its franchise area last month fell to its lowest level since lifting of the enhanced community quarantine last May which led to fixed costs from power suppliers to be spread over lower energy volume, resulting in higher effective generation rates to consumers.

Luzon peak demand in December decreased to 9,634 megawatts (MW) from 9,886 MW due to lower temperature and less working days.

Of the total power requirement for the month, 6.3 percent came from the wholesale electricity spot market, 37.3 percent from independent power producers and 56.4 percent from power supply agreements.

Meralco said this month’s rate increase is slightly mitigated by the inclusion of adjustments for pass-through over and under-recoveries for the period January 2017 to December 2019 as ordered by the ER.

The regulatory body directed the company to refund over-recoveries in transmission and other charges over a period of three months until fully refunded, and to collect an under-recovery in the generation rate for approximately 24 months until fully collected, which will have an initial impact to residential customers with a net refund of around P0.1150 per kWh.

Meanwhile, the ERC employed Roxas Cruz Tagle and Co. to verify whether Meralco’s reported refunds have been fully accounted for and returned or credited to customers’ accounts.

Agnes Devanadera, the regulatory body’s chairperson and chief executive officer, justified that the ERC saw it is a “prudent” move to engage the services of a consultant which has the technical expertise and capability to conduct an independent audit and verification of all the refunds of Meralco, considering the limitations of its existing organizational structure and manpower.

“The impending audit of Meralco refunds will ensure that what was due to consumers has been actually returned or credited to their accounts and truly benefited them,” she added.

Distribution utilities are required to file their respective applications to the ERC once every three years in order to ensure that the recovery of the various pass-through costs is fair and proper.