MVP group welcomes probe into Meralco rate hike

MANILA, Philippines – The head of the country’s largest power distributor Manila Electric Company (Meralco) welcomed the probe into the utility firm’s power rate hike this month.

On Thursday, December 12, Meralco chairman Manuel V. Pangilinan said any discussion regarding the increase is “good in general” since it will allow consumers to understand why charges went up.

“It’s good. I think in many respects, it creates a dialogue with the lawmakers in general as to the current state of the industry and the updated state of the industry. If there’s a need to represent it then let’s represent it. So, it’s a good to have this dialogue. For now, we are just trying to discern what is the current state of the power industry and hopefully the dialogue could lead to a more positive tone as to what do we do,” said Pangilinan.

The Department of Energy earlier said that it would probe how Meralco computed its rate increase of P4.15 per kilowatt-hour (kWh) for the month of December. Several lawmakers also called for an inquiry into the matter.

Meralco explained the increase was due to the maintenance shutdown of the Malampaya natural gas facility and outages of other power plants where the utility firm sources its power requirements from.

The Energy Regulatory Commission (ERC) approved on Monday, December 9 Meralco’s proposal to implement a P3.44 per kWh increase in its generation charge on staggered basis. The generation charge accounted for bulk of the total rate increase. Other charges included transmission, VAT, franchise tax and system loss.

Advance payment

Pangilinan said Meralco had paid its suppliers P10 billion generation charge in advance. “It will be a payable to them because the cycle is such that we pay the generation companies and we collect from the consumers the relevant charges. It’s a negative flow to us normally.”

Pangilinan however stressed that constraint in cash flow will not have a significant impact on the company’s bottom line.

Collusion among power plant operators

Asked about a possible collusion among power plant operators, Pangilinan said, “We don’t know that. We haven’t indicated that on our side.”

Aside from investigating Meralco’s rate computation, the Energy department is also looking into whether power plant operators conspired to shut down simultaneously.

Energy Secretary Carlos Jericho Petilla said his department hasn’t summoned the power generators to explain allegations of collusion.

“We have to analyze first the behavior of the market in the past four weeks and will ask them to explain depending on our findings. The ERC will have to penalize for market abuse if this is proven,” he said.

The plants that shut down and now are now being investigated include:

• 1,000-megawatt Sta. Rita and 500-MW San Lorenzo power plants owned by First Gen Corporation of the Lopez group
• 1,200-MW Ilijan plant of Kepco Philippines Corporation
• 730-MW Pagbilao power plant of Team Energy Corporation
• 600-MW Masinloc power plant of AES Philippines
• 600-MW Calaca power plant of DMCI Holdings Inc.

– Rappler.com