Meralco to cut rates this month

Households in Metro Manila and in some outlying areas will pay nine centavos less per kilowatt-hour in their electricity bills beginning this month. 

Ivanna de la Peña, vice president for utility economics of the Manila Electric Co. or Meralco, attributed the rate cut to the “very low” prices of electricity in the Wholesale Electricity Spot Market (WESM) as well as to the use of “banked” gas by First Gas.

But this developed as the Energy Regulatory Commission (ERC) allowed the National Power Corp. (Napocor) to charge higher rates.

“Low demand due to the Christmas holidays and the cold weather were factors responsible for the low prices in the WESM in December,” De la Peña said in explaining Meralco’s rate cut.

Power distributor Meralco services Metro Manila and nearby provinces.

The latest reduction, which came after a 45-centavo per kilowatt-hour cut in December, brought the generation charge of Meralco to P4.50 per kWh.

“The sharp decline in cost from these sources cushioned the upward adjustment in National Power Corp.’s GRAM and ICERA ordered by the ERC last December and the collection of the P2.11-billion unbilled line congestion cost for July 2008 which was already paid to the PEMC on schedule last August 2008,” she said.  

Also factored in the latest rate cut was the net settlement surplus of P392 million as of November 2008.

“With the end of the Christmas holidays, prices in the WESM are expected to normalize this January while the natural gas plants are already using contracted gas quantities for 2009 whose prices are indexed to world oil prices of the past six months,” she said.

De la Peña also noted a drop in Meralco’s system loss.

“With the reduction in the generation charge, system loss charges also declined,” she said.

A residential customer consuming 100 kWh per month will have an P8 reduction in his bill this January. For customers using 200 kWh, they will pay P18.80 less.

“We have always maintained that whatever savings we incur from the cost of power we obtain from our suppliers would be passed on to our customers. The generation charge is a pass-through charge, which Meralco does not earn from,” Meralco vice president for corporate communication Elpi Cuna said.

Napocor rate hike

Meanwhile, the ERC has approved Napocor’s petition for a rate increase.

In two separate orders, the ERC allowed Napocor to recover the costs incurred from its entering into contract with the 650-megawatt Malaya Thermal Power Plant as well as from its power purchase agreement for the 792-megawatt Caliraya-Botocan-Kalayaan (CBK) Hydro Power Plant Project.

Specifically, the ERC gave Napocor authority to recover from its customers an average base energy rate of $0.0032 per kWh or P0.1327 per kWh.

The Korea-based industrial firm Kepco poured in some $136-million worth of investments in 1995 for the Malaya plant, on condition that the capital would be recovered upon approval of the ERC.

For the CBK plant, Napocor was granted an authority to charge capital recovery fee of $5.8427 kilowatt-hours per month and operations and maintenance fee of P26 kWh per month as “levelized base rate throughout the remaining cooperation period” of 25 years starting 2001.

Napocor signed the $487-million build-rehabilitate-operate-transfer agreement for the CBK plant with the Industrias Metallurgicas Percamona S.A. of Argentina in 1998. The latter, however, sold its stake in the project to JPower and Sumitomo Corp. in 2005.

“The power complex’s cost shall be recovered through Napocor’s deferred accounting adjustment mechanism for the meantime until such time that this cost will be included in its base rate as approved by the Commission,” ERC said.