Meralco hikes rates

MANILA, Philippines - Electricity bills of the Manila Electric Co. (Meralco) will increase by about six centavos per kilowatt-hour (kwh) this month.

In a statement, Meralco said its generation charge that will be reflected in the bills this July will be slightly higher by 5.8 centavos, as the generation charge moves from P5.5967 per kwh in June to P5.6546 per kwh this month.

“Figures for the supply month of June 2010, which is the basis of the July 2010 generation charge, show the cost of power sourced from Independent Power Producers (IPPs) as increasing by around six centavos, from an average of P4.54 per kwh in May to P4.60 per kwh in June,” Meralco first vice president and utility economics head Ivanna dela Peña said.

Dela Peña attributed the rise in power rates for the month of July to a slightly lower dispatch of the plants in June at an average of 87 percent, versus the all-time high of 92 percent logged in May.

The Meralco official said the power sourced from its IPPs is priced lower than that of the National Power Corp. (Napocor).

“Despite the lower dispatch, the IPPs are Meralco’s cheapest sources of power. The effective cost of power sourced from Napocor stood at P5.59 per kwh while that from the Wholesale Electricity Spot Market (WESM) was at P7.90 per kwh last June,” Dela Peña said.

Meralco external communications head Joe Zaldarriaga, on the other hand, said they expect lower rates next month with the start of cooler weather due to rains.

“The start of Napocor’s wet season rates this July should provide a tempering effect in the generation charge next month. Hopefully, the incoming rainy season will bring rains sufficient to improve the capability of many of the hydro plants which in turn can potentially lead to the easing of prices in the WESM,” he said.

Zaldarriaga added that “Meralco has always maintained in previous statements that it consistently looks for the supply mix that would yield the most reasonable rates to customers. The company does not earn from the generation charge since it is merely a pass through charge.”

As this developed, the state-run Napocor has sought another power rate hike approval from the Energy Regulatory Commission (ERC), the country’s power sector watchdog.

Napocor told ERC in a petition that the company should raise its rates to recoup its costs to over P573.09 million in foreign exchange; and P3.82 billion in fuel and independent power producer incurred from the period January to April this year.

These costs, Napocor said, would result to increase in rates in Luzon, Visayas and Mindanao by 5 centavos, 3 centavos and 4 centavos per kwh; and by 19 centavos, 38 centavos and 47 centavos per kwh over a four-month period, respectively.

Adding up the two recovery costs, the total increase, if approved by ERC, would be 24 centavos per kwh for Luzon, 41 centavos per kwh for the Visayas and 51 centavos for Mindanao.

The impact of the power rate hike on consumers will hinge on ERC’s approved amount and the length of recovery period.

The application for rate increase is the third filed by Napocor since June.

The application for higher rates is part of the recovery schemes allowed under the Electric Power Industry Reform Act (EPIRA).

Under this law, Napocor could apply with ERC for so-called Generation Rate Adjustment Mechanism (GRAM) and Incremental Currency Exchange Rate Adjustment (ICERA) to recover cost and then pass the cost to consumers.

Meralco is Napocor’s biggest client.