FROM the more than P1 per kilowatt-hour (kWh) generation charges hike, the regulatory body has directed the Manila Electric Company (Meralco) to further reduce generation cost to be billed to its customers this month to less than P1 per kWh.

Instead of its petition of P1.3852 per kWh generation cost adjustment, the Energy Regulatory Commission (ERC) wanted Meralco to drop it to 91.14 centavos per kWh.

"The Manny Pacquiao Blog". Click here for stories and updates on the Filipino boxing champ.

ERC executive director Francis Saturnino Juan said Meralco's basic generation charge for the March billing should be P5.8417 per kWh, much lower than the P6.3154 per kWh as stated in their petition.

Meralco petitioned the ERC Tuesday asking for a lower generation charges to shield the customers from burdening this cost, which is due mainly to the utilization of expensive plants.

Meralco explained that the generation charge increased by P1.8298 per kWh to P6.76 per kWh, the highest increase recorded in the previous years.

Likewise, it said the remaining balance of the generation cost amounting to P1.046 billion be spread over a six-month period beginning April until September.

Juan noted the decision to further slice Meralco's generation charge after it was found that it source 17 percent of its requirement from the Wholesale Electricity Spot Market (WESM), which is higher than the mandated 10 percent.

He also said they are asking Meralco to explain and justify why they source another seven percent of their requirement from the spot market.

Because of this, Juan said the ERC decided to limit at seven percent the WESM purchases at the National Power Corp.'s time-of-use rates, which are lower than the WESM prices, thus explaining the further cut in generation charge.

He likewise said there is no decision yet if the regulator will allow or not the power retailer to collect the difference between WESM prices and Napocor TOU rates because this will depend on how Meralco can explain the increase in purchases at the spot market.

Meralco sourced 38.5 percent of its electricity requirements from Napocor and the remaining 44.4 percent from its independent power producers—the 1,000-MW Sta. Rita and the 500-MW San Lorenzo gas plants, both of which are owned and operated by the Lopez-owned First Gas Corp., and Quezon Power Ltd.

For the month of February, Meralco said that it incurred a total generation cost of P15.9 billion.

On the other hand, Juan said the proposed collection of seven centavos per kWh over the next six months can still be implemented by Meralco. (MSN/Sunnex)