Huge cut in Meralco’s January rate hike

MANILA, Philippines (UPDATED) – Power distributor Manila Electric Company (Meralco) announced Thursday, March 20 a huge cut in the generation charge increase it was seeking for January following a regulatory order voiding electricity spot market prices.

This means Meralco customers will have to pay an additional amount for the electricity they used in the first month of the year, but this amount will be way lower than expected.

In a press conference, Meralco spokesperson Joe Zaldarriaga said a recalculation the company made resulted in a generation charge of P6.12 per kilowatt-hour (kWh) for January, versus the original P10.23/kWh Meralco had computed.

Meralco billed customers a generation charge of only P5.67/kWh in January due to a temporary restraining order (TRO) issued by the Supreme Court in December. It was seeking to recover P4.56/kWh more in the coming months – representing the balance of the P10.23/kWh.

However, with the recalculated rate, Meralco would only recover P0.45/kWh more.

“We recomputed the rate in January based on the invoice that PEMC (Philippine Electricity Market Corporation) sent us,” said Zaldarriaga.

Meralco officials said the cut in the generation charge increase was due to the regulated Wholesale Electricity Spot Market (WESM) prices ordered by the Energy Regulatory Commission (ERC). ERC voided WESM prices for the supply months of November and December, citing “market failure.”

“There was a significant decline in WESM charges – from the original P36/kWh, it’s down to P8.33/kWh,” said Lawrence Fernandez, Meralco head of utility economics.

Meralco’s other suppliers who bought from WESM also slashed their generation charges. These suppliers include AES Masinloc Power Partners Company Inc., which runs the 600-megawatt Masinloc coal-fired power plant in Zambales; and Team Energy Corporation, which runs the 1,218-MW Sual coal-fired power plant in Pangasinan.

Fernandez said the additional charge that Meralco would be recovering for the January billing month could be attributed to higher charges imposed by the plants that used expensive liquid fuel during the maintenance shutdown of the Malampaya natural gas facility.

Some of the plants supplying Meralco used liquid fuel to generate power in November and December when Malampaya was unavailable.

Meralco, meanwhile, was forced to source more power from WESM when several other plants went on unscheduled outages during Malampaya’s maintenance.

WESM prices soared because many generation plants violated rules by not offering their maximum available supplies. ERC therefore concluded that WESM prices could not be considered “reasonable.” (READ Rappler’s special report: What Meralco’s rate hike tells us about the power sector) 

ERC ordered WESM operator, PEMC, to impose regulated prices for the months covering the Malampaya shutdown, resulting in the significant decline in WESM bills.

Meralco said the additional charge for January would still have to be approved by ERC. It added it plans to bill consumers on staggered basis.

“We will file that with the ERC. Upon filing, there will be a public hearing. Concern parties will be given the opportunity to file their comments during the public hearing. ERC will come out with a resolution on the new charge after the whole process,” said Meralco legal services head William Pamintuan. 

Meralco will recalculate the generation charge for the December billing month once the Supreme Court lifts its TRO. – Rappler.com