Electricity rates to decline P0.02 to P0.03 per kwh in January 2010

December 29, 2009 1:02 pm 

MANILA, Dec. 29 — The Manila Electric Company (Meralco) Tuesday said the generation charge is expected to significantly go down in January 2010 following the full use of banked gas by the natural gas plants this December. Meralco vice president and Utility Economics head Ivanna de la Peña said based on estimates as of December 25, the generation charge is expected to go down by around 26 to 27 centavos per kwh in January, continuing the downward trend exhibited since May 2009.

De la Peña said system loss charges, on the average, will also drop by around three centavos following lower cost of generation, bringing the cumulative reduction in generation and system loss charges to around 29 to 30 centavos per kwh.

"Even with the PBR adjustment of 26.9 centavos recently approved by ERC, customers will still see a net reduction of around two to three centavos in their January bills,” she said.

As reported early this month, Meralco independent power producers' (IPPs) First Gas Sta. Rita and San Lorenzo already met their contracted levels of natural gas for 2009 in November and were already starting to use banked gas which is lower-priced, as it reflects price levels in 2002 and 2003.

Estimates of Meralco’s Energy Sourcing Office point to an average reduction in the cost of power supplied by the IPPs by around 55 centavos per kwh, the main contributor to the expected 26 to 27 centavos expected drop in the generation charge.

IPPs contributed around 55 percent of Meralco’s requirements this December.

Meralco clarified that while the numbers are still tentative pending its receipt of the bills of its suppliers, the indications definitely point to a significant drop in generation and system loss charges in January.

In a related development, Meralco received Tuesday two rulings from the Energy Regulatory Commission (ERC).

The first approved its rate verification and translation filing under Performance-Based Regulation (PBR) for Regulatory Year (RY) 2010, covering the period July 2009 to June 2010.

In a decision dated December 14, the ERC approved a Maximum Average Price (MAP) for RY 2010 of P1.4917 per kwh, for implementation starting Meralco’s January 2010 billing.

Meralco’s RY 2010 MAP is 26.9 centavos higher than the RY 2009 MAP of P1.2227 per kwh.

“The combined 29 to 30 centavos expected reduction in generation and system loss charges this January will more than offset the average 26.9 centavos adjustment in Meralco-related charges under the RY 2010 MAP. Cooler weather will also result in lower consumption, further putting downward pressure on electricity bills in January,” assured Meralco’s de la Peña.

Meralco’s first adjustment under PBR was implemented in May this year, almost six years since Meralco’s last rate increase in June 2003 and almost two years after Meralco’s entry to PBR in July 2007.

As part of PBR, Meralco last September implemented its Guaranteed Service Level (GSL) pay-out for RY 2008 amounting to P100 million to over 750,000 customers where Meralco was not able to meet its service commitments.

The second ruling resolved Meralco’s Motion for Reconsideration (MR) on ERC’s decision on its transmission charge under-recoveries.

Under the ruling, ERC confirmed under-recoveries in transmission charges for June 2003 to July 2007 amounting to P5,418 million and carrying cost of P1,507 million, for a total collectible from customers of P6,925 million.

This is P1,577 million higher than the initially approved amount following Meralco’s substantiation and justification of amounts previously not considered in the earlier ruling.

The ruling will not impact on the level of transmission charges since it merely prescribes a longer collection period from customers of the under-recoveries.

Meralco External Communications manager Joe Zaldarriaga stressed the utility’s service commitment to its customers in 2010 and beyond, “Meralco is always cognizant of the need to sufficiently address the requirements of its customers. With more timely adjustments under PBR, combined with our ability to already collect on under-recoveries in pass-through costs, our customers could expect better and more reliable service. This is our continuing commitment to our close to five million customers.” (PNA)

FFC/LDV/PR

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