Rates hike seen as Meralco, ACEN seek recovery of addt'l costs from high coal prices

Customers of the Manila Electric Company (Meralco) may expect higher electricity rates as the power distributor and its supplier, ACEN Corp., are seeking to adjust a provision in their power supply agreement (PSA) to recover additional costs incurred due to a surge in coal fuel prices.

Meralco has an existing PSA with ACEN for the supply of a 200-megawatt (MW) baseload capacity and 110-MW mid-merit capacity.

In a chance interview with reporters, Meralco executive vice president and chief operating officer Ronnie Aperocho said Meralco and ACEN will submit a joint petition to the Energy Regulatory Commission (ERC) for Change in Circumstances (CIC).

Under its CIC petition, the companies are seeking to recover a total of P706.14 million from consumers on a staggered basis of six months.

The rate impact of the CIC or the amount it seeks to pass on to consumers for six months will start at P0.0388 per kilowatt-hour (kWh) in the first month, P0.0413 per kWh in the second month, P0.0353 per kWh in the third, P0.0322 per kWh in the fourth, P0.0320 per kWh in the fifth, and P0.0355 per kWh in the last month.

“It will be jointly filed in the next few days,” Aparecho said.

In its presentation, Meralco cited Section 11.3 of its PSA with ACEN which allows parties to file an application for price adjustment if a CIC “materially and adversely affects the financial condition of power supplier.”

Meralco first vice president and Regulatory Management head Jose Ronald Valles said, “The reason why we’re joining the filing is we want to preserve the PSAs.”

“Under the contract, if we don’t agree to file and seek the approval of the ERC for the claim, then they have a recourse to terminate the PSA, which is provided for under the contract,” Valles said.

“We don’t want them to exercise that right. We calculated that if they are terminated, it will be more costly as that means we will secure another contract from another supplier that is more expensive, which we don’t want,” Valles said.

Meralco cited the “steep climb” in coal prices caused by Indonesian coal export ban, which continued despite being lifted, exacerbated by the Russia-Ukraine conflict.

While a power rate hike is looming due to the joint petition, customers of Meralco may expect a rollback this month.

Meralco spokesperson Joe Zaldarriaga, in a statement, said that “initial indications show lower generation charge this March” due to “resumption of operations of the San Buenaventura power plant after undergoing maintenance, and lower WESM prices given the improved supply situation in the Luzon grid.”

Also contributing to the expected electricity rate decrease was the refund in incremental generation charges which corresponded to the increase in natural gas prices under a new gas sale and purchase deal.

Last 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.—LDF, GMA Integrated News