No MERALCO distribution rate increase allowed under Albano's chairmanship-ERC

The ERC (Energy Regulatory Commission) denounced the allegation that it approved all MERALCO (Manila Electric Company) petitions for rate increase. Records will show that all the rate adjustments implemented by MERALCO as approved by the ERC under Albano’s leadership were on the generation charge which is a mere pass- through charge that does not go to the coffers of MERALCO. “There was never a single instance during my term that the ERC approved a MERALCO distribution rate increase,” ERC Chairman and CEO Rodolfo B. Albano, Jr. clarified.

The statement was issued to rectify a malicious and baseless news column of a new business daily that stated it was under Rodolfo Albano’s chairmanship that the ERC approved nearly all of MERALCO’s petitions for rate increase. In fact, there was only one petition for distribution rate increase filed by MERALCO under Chairman Albano’s leadership. This petition was later withdrawn.

A consumer’s electric bill consists of several charges, among them generation and distribution. The generation charge covers the distribution utility’s cost for the power it purchases from its suppliers. This charge is included in the monthly electric bill, with MERALCO acting merely as a collection agent for the generation company. This may vary from month to month depending on the cost of electricity, which in turn may result in an upward or downward adjustment in the generation charge portion of the electric bill. This adjustment had been previously allowed by law to be implemented automatically by the distribution utility. During the time of the then ERB (Energy Regulatory Board), this was known as the PPA (Power Purchase Adjustment) mechanism. A similar mechanism called the AGRA (Automatic Generation Rate Adjustment) was put in place in October 2004. The IRR (Implementing Rules and Regulations) amendments put in place by the DOE (Department of Energy) and the JCPC (Joint Congressional Power Commission) on 26 June 2007 were meant to remove all doubts as to the validity of a process that had long been allowed by law and had, in fact, been long used by the then ERB.

The distribution charge, on the other hand, is what MERALCO charges for the service of delivering electricity to the consumers. Any adjustment in this charge can only be implemented by MERALCO after due notice and hearing. Since Chairman Albano took over the ERC, MERALCO has not been granted any increase in its distribution charge. As to the rate increase petitions of MERALCO, they still undergo the same hearing process which has been in place since the time of the then ERB, which the ERC merely continues to follow.

As to the claim that the ERC did not act on the petition of the NASECORE (National Association of Electricity Consumers for Reforms, Inc.) to require MERALCO to specify in its monthly electric bills the details such as volumes and prices of power it buys from various generation companies, the ERC on 06 February 2007 issued Resolution No. 05, Series of 2007 directing all DUs to post in their respective websites the breakdown of their Generation Charges including, but not limited, to their sources.

“The ERC had always put the consumers at the forefront of its policy formulation and decision making. In fact, it was during my term that the public hearings were revolutionized through the introduction of expository hearings at the DU’s franchise area and the inclusion of a Consumer Hour,” Chairman Albano concluded.

August 1 , 2007