ERC reduces MERALCO's under-recovery claims by P9.1B
The Energy Regulatory Commission (ERC) issued today, 03 September 2008, its
Decision dated 04 June 2008 on the Manila Electric Company's (MERALCO's) ten
(10) applications for adjustments in its generation charge to recover its generation-related
under-recoveries from August 2006 to May 2007. In its Decision, the ERC reduced
the amount of MERALCO's claims by about P9.1B or from the total claims amounting
to P21.375 Billion to P12.247 Billion.
The total claims of MERALCO of P21.375 Billion as contained in its 10 applications filed with the ERC represent its generation-related under-recoveries or the difference between what it paid to its power suppliers and the amounts it was able to recover through the generation charge that it was authorized to impose on its customers.
The ERC reduced MERALCO's claim by P6.427 Billion as a consequence of its decision to use the NPC-TOU rates for all WESM purchases for September and October 2006, instead of the higher market settlement price for these months (ERCOrder dated 30 January 2008 in ERC Case No. 2006-080) and disallowed another P2.701 Billion after applying the legal principles in Republic Act No. 9136 that govern the recovery by distribution utilities (DUs) of their generation costs through their rates.
Out of the P12.247 Billion amount confirmed by the ERC, MERALCO was already able to recover P2.270 Billion on the basis of the provisional orders earlier issued by the ERC, and it has already started recovering the P8.829 Billion as authorized under ERC's Order dated 10 December 2007. Thus, the impact of the Decision dated 04 June 2008 was that only the remaining amount of P1.961 Billion, inclusive of carrying charges, was to be recovered by MERALCO, and this translated only to a P0.0241/kWh adjustment in MERALCO customers' monthly bills, which adjustment would be in effect only until the full amount is recovered.
"In verifying the generation costs, the ERC strictly adhered to the principle that only reasonable generation costs should be recovered from electricity consumers, consistent with the provisions of the Electric Power Industry Reform Act (EPIRA). Rest assured that the ERC will always be your fair and just regulator that looks after the welfare and interests of the stakeholders of the electric power industry," ERC Chairperson Zenaida G. Cruz-Ducut said.
September 3, 2008