Meralco increases power rate

GENERATION charges being billed by power retailer Manila Electric Company (Meralco) to its more than four million customers will increased by as much as P1.40 per kilowatt hour (kWh) this month.

Before the Energy Regulatory Commission (ERC), Meralco asked to lower by 44.46 centavos the increase in the generation charge this March to P1.3852 per kWh from the P1.8298 per kwh, which it is allowed to recover from its customers following the increased in generation charges from its suppliers.

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But to mitigate the effects of the abrupt increase in generation cost, Meralco proposes that instead of reflecting the actual generation charge of P6.76 per kWh in its March 2010 billing to its customers, it instead be allowed to implement a lower generation charge of P6.3154 per kWh for this month's bill.

In its petition, Meralco said that for the supply month of February 2010, it incurred a total generation cost of P15.9 billion, which would translate into a generation charge of P6.76 per kWh to its customers for the March 2010 billing.

“This sharp and sudden increase in generation cost is mostly accounted for by the high prices in the Wholesale Electricity Spot Market (WESM), brought
about by the shortage in electricity supply, as there were several plants which were either out due to preventive or emergency maintenance, or with de-rated capacity because of the El Nino phenomenon. This was aggravated by the increase in demand due to the start of the summer season,” Meralco said.

It however stressed that the hike in the generation charge is not a Meralco increase.

The generation charge is a mechanism to reflect the cost of power from Meralco’s various suppliers and since it is a pass-through charge, Meralco does not earn from the generation charge, the company explained.

Meralco is sourcing more than half or at least 56 percent of its power requirement from WESM and state-run National Power Corp. (Napocor) and 44 percent are from its own independent power producers (IPPs) namely the 500-MW San Lorenzo and 1,000-MW Sta. Rita power plants in Batangas-owned and operated by First Gas and the Quezon Power Ltd. Co.

It also proposed that the balance of the generation costs amounting to
P1.046 billion be spread over a six-month period starting April 2010 until September, representing a collection of around 7 centavos per kWh.

Under Article III, Section 2 of the Automatic Generation Rate Adjustment (AGRA) Rules, distribution utilities are authorized to automatically reflect the generation cost from its suppliers through the generation charge using a prescribed formula which ensures its pass-through nature.

At the same time, the distribution utility noted that the amount of generation costs is "substantial," it would not be able to promptly pay the cost of generation to its suppliers without immediately recovering said costs from its customers.

However, Meralco said it is aware that the impact will be higher generation charges, if it would immediately recovered the generation cost and would place great financial burden upon its customers.

“Considering the pressing nature of the instant Petition to shield the Petitioner’s end-users from such abrupt increase in generation costs and to avoid any consequential financial prejudice to both Petitioner and the consumers, it is therefore urgent that a provisional authority be immediately issued upon filing and pending hearing of the instant Petition,” it added.

It will be recalled that since May last year, the generation charge had been on a downward trend for nine months. The generation charge may reflect either an upward or downward adjustment depending on several factors which are beyond the control of Meralco.

In related developments, Meralco reminded all its customers to use electricity wisely during the hot months since consumption significantly increase during this period.

“The hot summer months usually raise the consumption levels of our customers," said Meralco External Communications Manager Joe Zaldarriaga.

Meralco said that simple but often neglected energy saving tips are a big help in lowering electricity use most especially in households.

“Very simple tips such as using compact fluorescent lights instead of incandescent bulb, doing your ironing at one time and opening refrigerators only when needed will, in one way or the other, help a household save electricity," Zaldarriaga added.

The company also pointed out that appliances will operate more efficiently and use less energy when it is in good working order.

The power service provider said that since the summer months are vacation time for schoolchildren appliance usage is also expected to go up.

“We also advise our customers to make sure that their household appliances are well maintained in order to cope with the expected increase in its usage.”

Some appliances known to use up a lot of electricity during summer include air-conditioners, refrigerators, freezers, electric fans, water pumps and entertainment appliances like TV's and computers among other appliances. (MSN/Sunnex)