ERC rectifies the reported 26-centavo rate increase

The Energy Regulatory Commission (ERC) clarified that the provisional approval it granted to MERALCO (Manila Electric Company) in ERC Case No. 2006-062 RC did not result from a petition for a rate increase per se but for mere recovery of power generation costs paid in advance by distribution utilities like MERALCO. “The ERC approved only a temporary adjustment to cover the generation costs and system losses, including the Value Added Tax (VAT), for October last year. The said adjustment will even decrease the customers’ bill by, at least, PhP0.0192/kWh from the PhP4.7096/kWh which MERALCO also implemented in December 2006. The adjustment of PhP0.2614/kWh for January 2007 billing is just a one-time recovery for one (1) month which will be reflected as Differential Amount for October 2006. After January 2007, said differential amount should no longer be reflected in the customers’ bill, unless adjustments in the generation cost are subsequently ordered by the Commission,” ERC Chairman and CEO Rodolfo B. Albano, Jr. emphasized.

The adjustment in the Generation Charge accounted for the power purchases that MERALCO sourced from the WESM (Wholesale Electricity Spot Market), NPC (National Power Corporation), and its IPPs (Independent Power Producers) in September 2006.

The MERALCO actually petitioned for approval of a Generation Charge of PhP5.7334/kWh vis-à-vis the Generation Charge of PhP4.4290 based on August 2006 level or an adjustment of PhP1.3044. However, the ERC provisionally authorized only the amount of PhP4.6904 as Generation Charge or a PhP0.2614/kWh adjustment.

The adjustment only enables MERALCO to recover the amount it paid in advance to the generation companies to have a continuous supply of electricity in every household. Such adjustment does not result to any additional revenue for MERALCO. “The public should not be alarmed because the ERC will always do its best to soften the impact of adjustments in the customers’ billings and is always finding ways to alleviate the burden of paying high electricity costs, Chairman Albano added.

January 8, 2007