ERC validating Meralco’s pass-through charges

The Energy Regulatory Commission (ERC) is still validating if Manila Electric Company (Meralco) can pass on its customers the increased generation charges due to higher cost of electricity contracted from natural gas-fired power producers.

At the sidelines of Department of Energy’s business matching event on Thursday in Taguig City, ERC chairman and CEO Monalisa Dimalanta Meralco had filed a motion officially seeking the power industry regulator’s validation if it can pass-through adjustments in gas supply contracts to its consumers.

“Can they really charge it [to customers]? That is what they are asking in their motion,” Dimalanta said.

Meralco’s filing stemmed from ERC’s letter urging the power distributor to complete its review to justify the rate adjustment it is implementing this month.

Meralco raised its household electricity rate by 57.38 centavos per kilowatt-hour (kWh) for February, bringing the power distributor’s overall rate for a typical household to P11.9168 per kWh from P11.3430 per kWh in January.

The upward adjustment translates to an increment of about P115 in the total bill of a residential customer consuming 200 kWh.

The upward adjustment resulted from the increase in generation charge by 45.52 centavos due to higher cost of power from Independent Power Producers (IPPs) and Power Supply Agreements (PSAs) amid increased use of imported liquefied natural gas.

As it awaits ERC’s validation, Meralco had announced it would refund its customers for generation charges following adjustment in natural gas prices, which would reflect in the next billing month. 

“Based on their statement, they will refund around four to five centavos [per kilowatt-hour],” Dimalanta said.

The refund came on the heels of the ERC’s letter that passing of such costs to consumers may be premature pending validation of the basis of such charges.

Nevertheless, the ERC chief said that if the regulatory body finds that such charges are valid the power distributor can pass it on to its customers.

“If the outcome [of the review] is ‘yes, you can pass it on’ then they can charge it to customers but still it has to be validated first,” Dimalanta said.

The ERC chief, however, said that should the agency find that a full refund is necessary, it will be implemented in the April billing month.

“The number one lesson is that, not only Meralco, but all utilities that they cannot pass on to consumers what generation companies charge to them if it’s not validated,” Dimalanta said. —NB, GMA Integrated News