Meralco says ERC application not a rate hike

Manila Electric Co., the country's largest power distributor, on Tuesday clarified reports that it is seeking an increase in power rates, saying the adjustment it is seeking from the Energy Regulatory Commission is purely passed through cost. "We would like to clarify that the adjustment we filed before the Energy Regulatory Commission (ERC) is not a Meralco rate increase but merely to recover adjustments in both the December 2006 and January 2007 generation and system loss charges," Meralco president and chief operating officer Jesus P. Francisco said in a statement sent to the media. " I also would like to assure the public that this is merely just a cost-recovery mechanism and revenue-neutral in so far as Meralco is concerned. We never gain a single centavo from changes in the cost of power supply that is passed on to our customers," Francisco said. Francisco said that the P1.73/kwh "rate hike" mentioned in several news reports is the cumulative adjustment under the proposed generation charges for December 2006 and January 2007, which only reflects the cost of electricity purchased for the supply months of November and December 2006. "Meralco merely collects what it is billed by its power suppliers which include NPC, WESM and the IPPs," the firm said in its statement. Francisco said the high cost of suply from the Wholesale Electricity Spot Market is the primary reason for the increase in the generation charge during the periods it cited in its application with the ERC. To cover the impact of the increase in the generation charge, Meralco said its application proposed that “WESM bills for the affected months be recomputed at NPC’s TOU rates, similar to the process undertaken by the ERC for the third and fourth month of WESM commercial operations." Meralco said it has already paid the National Power Corp., Independent Power Producers and the WESM for the power supplied during the aforementioned periods. “ Since Meralco now has to make monthly filings for adjustments in its Generation and System Loss Charges, there is now a lag of about five months from the time the cost is incurred and its subsequent recovery from customers," Francisco said. “A subsequent filing to recover cost in January 2007 was for a generation charge of P4.6078 per kWh for February 2007. This is significantly lower than the Generation Charge applied for January 2007 of P6.4221 per kWh to recover cost in December 2006," he added. Meralco said the underrecovery for both December 2006 and January 2007 amounted to over P5 billion.-GMANews.TV