Meralco’s rate hike plea reviewed

by Alena Mae S. Flores – February 20, 2017 at 09:13 pm

from Manila Standard Today

The Energy Regulatory Commission will decide on the petition of Manila Electric Co. to stagger the power retailer’s P0.92 per kilowatt-hour rate increase as a result of the Malampaya maintenance shutdown.

“We will decide before March 3,” ERC Chairman Jose Vicente Salazar said.

Meralco asked ERC to approve the staggered rate increase, starting with P0.30 per kWh in March, followed by another P0.30 per kWh in April and the balance of P0.32 per kWh in May to mitigate the impact to consumers.

“We know the urgency of Meralco’s application and we are already reviewing it,” Salazar said.

Meralco bills its customers usually during the first week of the month.

Meralco said in an application with the ERC the Malampaya shutdown on Jan. 28 to Feb.16 forced natural gas power plants to use the more expensive liquid fuel.

The Malampaya gas field northwest off Palawan, operated by Shell Philippines Exploration B.V., Chevron Malampaya LLC and PNOC Exploration Corp., provides fuel to around 3,000 megawatts of natural gas power plants in Batangas.

The facility is now back on line, delivering natural gas to the power plants.

Meralco said the shutdown coincided with the maintenance repair of the power plants of Sem-Calaca Power Corp. and Quezon Power Philippines plant, which collectively contribute 565 MW to Meralco,

Meralco said it drew up measures to mitigate the impact of the shutdown on supply and power rates although the power distributor’s blended rates were still expected to rise.

“The incremental fuel costs due to the use of liquid fuel is expected to increase the overall rate of Meralco from March 2017 billing by about P0.9171 per kWh,” Meralco said.

It said it could automatically reflect the full generation costs for the March billing to customers but “it is cognizant of the financial burden such rate hike will place on its customers.”

“To mitigate the effect of the abrupt increase in generation costs due to the use of liquid fuel, especially considering that the WESM [Wholesale Electricity Spot Market] prices may also increase during the period, Meralco proposes that instead of reflecting the full incremental incremental fuel cost component of the total generation costs in the March 2017 generation  charges, it be allowed to implement the increase in three billing months starting March until May 2017,” it said.

Meralco said of the estimated incremental fuel cost of P2.4 billion incurred during the shutdown, only a third or P791 million would be included in the March and April billings and the balance in May.

Meralco said the computation was without prejudice “to any adjustments that may be necessary as actually reflected for the power bills issued by the power suppliers for the February 2017 supply month.”

The company also asked ERC to defer the payment to suppliers during the three-month recovery period. Meralco said “these proposals are without prejudice to any application that may be subsequently filed for the recovery of any appropriate carrying charge.”