Saturday, November 08, 2008 Meralco imposes 'temporary' power hike
CUSTOMERS of utility giant Manila Electric Company (Meralco) are set to suffer another electricity rate hike as the company imposed a 30-centavo per kilowatt-hour (kWh) increase in its generation charge this month.
Ivanna dela Pena, Meralco's vice president for utility economics, said the increase in the November bill is "temporary."
The hike, she explained, is primarily due to the rise in the cost of natural gas that accounts for 75 percent of the billings to Meralco from First Gas plants, which supplied 40 percent of the company's requirements in October 2008.
"This is a temporary situation starting this month and lasting until the end of the year," she said.
According to her, the cost of natural gas moves with the preceding six months' average basket of fuel prices specified in the contract with gas sellers.
"The cost of natural gas for October 2008 was set using average prices from April to September 2008, which include peak levels in May to July 2008. Because of the lag, the significant reductions in world oil prices this quarter will only be reflected on gas prices in January," added dela Pena.
Meralco vice president for corporate communications Elpi Cuna Jr., for his part, said the adjustments in the cost of generation are revenue-neutral for Meralco.
"Meralco does not earn a single centavo from the adjustments in the cost of power supplied to Meralco. However, addressing the issue on the removal of the royalties imposed on indigenous fuel supply such as natural gas or using its proceeds to lower power rates will be very much welcomed by consumers since this will definitely redound to lower electric bills," he said.
According to Cuna, lifeline consumers or those consuming below 100 kWh will be partly shielded from the increase because they enjoy discounts of 50 percent, 35 percent, and 25 percent on their monthly bills.
"It also helps that electricity consumption during these cooler months is much lower," he continued.
"We would like to reiterate that the increase is only temporary. Meralco is always cognizant of the need to ensure that consumer interest is addressed and that all means are adopted in order to mitigate any adjustment in the price of electricity," he added.
Assuming the October dispatch will be replicated in November and December, consumption of the expensive gas will be limited to the first three weeks of the November supply month. After that, the much cheaper banked gas will be used.
"Banked gas is that which was not consumed in 2002 to 2003 and thus is priced much lower," said dela Pena. "With the cost of gas a direct pass-through, a tempering of the generation charge is expected in the next two months."
Like Cuna, dela Pena noted that a substantial portion, estimated at 55 percent of the cost of natural gas, is payment of royalties to the National Government.
At current prices, the royalty share amounts to over P2.60 per kwh.
Business groups such as the National Competitiveness Council, Philippine Chambers of Commerce and Industry (PCCI) as well as the Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) have long advocated for the reduction of this royalty and the use of its proceeds to lower power rates. (MSN/Sunnex)
