ERC approves Meralco's new Generation Charge

The Energy Regulatory Commission (ERC), in an Order dated June 2, 2004, approved an adjustment on Meralco’s generation charge by Php 0.1327/kWh effective its June 2004 billing period. The adjustment was made through the Generation Rate Adjustment Mechanism (GRAM).

This is the second time since the inception of GRAM that Meralco applied for a revision in its generation charge. The first one was made effective in February 2004 when the unbundled generation rate of Php 3.4029/kWh was reduced by Php 0.2143/kWh, resulting to a Php 3.1886/kWh generation rate.

Recently, Meralco has petitioned for an increase of Php 0.2778/kWh on top of the Php 3.1886/kWh it charges to its customers, but the ERC only allowed Php 0.1327, or 52% lower than what was proposed. Its new generation rate is now Php 3.3213/kWh.

In a related development, Meralco residential customers will experience a further rate reduction of Php 0.0309/kWh for the month of June 2004. The utility’s current mandated rate reduction stands at Php 0.1825/kWh from its previous Php 0.1516/kWh. The said action was very timely as it effectively reduced the impact brought about by the change in the generation rate.

“Meralco is merely collecting from the customers the reasonable costs passed on to it by its power suppliers, such as the National Power Corporation (NPC) and the Independent Power Producers (IPPs). This does not give Meralco additional profit. The GRAM allows the utilities to recover the legitimate purchase power costs,” ERC Chairman Rodolfo B. Albano, Jr. explained. “We need to maintain a balance between the interests of electricity investors and that of the consumers,” he added.

GRAM is an adjustment recovery mechanism designed to reflect the changes in operating costs due to the upward and downward movements in the prices of fuel used in generating power, as well as changes in the prices of electricity purchased from other sources. It allows periodic adjustment in the generation rate. Adjustments made in the generation charge using this mechanism do not in any way generate additional income/revenue to the electric utilities for it is merely a pass-on charge.

June 10, 2004