ERC advises Enrile to stick to the facts, Advises public to rely on objective reports

Energy Regulatory Commission (ERC) Chairman Manuel R. Sanchez advises former Senator Juan Ponce Enrile to stick to the facts so that the ERC can spend more time in the discharge of its functions.

“The false allegations of Mr. Enrile can cause unrest among the electricity consumers,” Sanchez said.

Enrile accuses ERC of allowing Meralco to overcharge its customers by P640 million in power cost and system loss. According to Enrile, this amount is from the P0.11/kWh overcharge in power cost.

Sanchez pointed out that the alleged overcharge represents the deferred PPA which Meralco is authorized to collect from its customers pursuant to ERC Orders dated December 19, 2002 and May 12, 2003. The approved unbundled rate for Meralco of P3.40/kWh is composed of P3.30/kWh weighted average generation rate and the P0.10/kWh deferred Purchased Power Agreement (PPA) charge.

On Enrile’s allegation that ERC allowed Meralco to recover a 16% system loss, which is above what is prescribed by law, Sanchez stated that the said allegation is false and misleading again. The Commission only allowed Meralco to recover a maximum of 9.5% for system loss instead of 16% as alleged by the former senator.

Enrile’s system loss computation is arrived at by incorrectly dividing the residential system loss alone by the generation rate of P3.40/kWh. To arrive at the appropriate system loss, the system loss should be computed based on the total cost of power before it was allocated to a per customer class.

Sanchez stressed that Enrile failed to inform the public that the Return-on-Rate Base (RORB) of 15.5% allowed by ERC to be charged to its customers is a pre-tax rate of return. When the effect of excluding the income taxes is considered, the 15.5% rate of return translates to a post-tax rate of return of 10.45%, which is within the 12% RORB limit prescribed by law.

The ERC Chief also belied reports that he hinted on the likely approval of Meralco’s rate hike petition. He pointed out that “at this point, the Commission has not even started with its first public consultation and is therefore in no position to issue any comment on the case still set to be heard.”

Sanchez further stressed that “ERC is not for or against the rate change application of Meralco. We stand to be a fair and just regulator, striking a balance between the interest of consumers and that of the electricity providers and investors.”

October 21 , 2003