ERC gives self till end-Feb to decide on Meralco rate

The Energy Regulatory Commission (ERC) has given itself until end-February to decide on the unbundling rate petition of the Manila Electric Co. (Meralco).

"We have been setting a lot of deadlines. We have to finish it. This time, we want it done, based on our internal deadline, by the end of this month," acting ERC chairperson Leticia Ibay said.

Ibay said that the commission’s decision on Visayas Electric Co. (VECO), the first unbundling application by a distribution utility that was decided upon by ERC, will serve as a benchmark for its future unbundling decisions.

The ERC order allows VECO to collect an overall tariff of 6.8 centavos per kilowatthour (Kwh), way below the 39 centavos per Kwh increase it was asking for. On the other hand, Meralco is asking the ERC for a tariff of P1.12 per Kwh including the 30-centavo basic rate hike it filed in 2000.

Last year, the ERC asked the Lopez-run power firm to consolidate the unbundling rate application and the rate hike petition to fast track the resolution of the two cases.

As this developed, the Philippine Electric Plant Owners Association (PEPOA) submitted its comments on the guidelines for ERC's adoption of an alternative form of rate setting methodology for the National Transmission Corp. (Transco) and any future concessionaire of the transmission firm.

In a paper submitted to the ERC last Feb. 10, PEPOA is asking the ERC to explain why it has to abandon the existing method which is based on the return-on-rate base in favor of performance-based rating (PBR).

"If the ERC believes that the RORB has some inherent flaws, then these flaws must be pointed out. How the proposed method can correct these flaws must also be explained," PEPOA first vice president Ramon Abaya said.

According to PEPOA, the ERC must convince the industry stakeholders that the proposed shift will correct some criticisms against RORB, focusing on revaluation, rate of return, and income taxes.

The group said the proposed methodology also calls for the use of revenue caps instead of price caps. "The use of a revenue cap may be disadvantageous to the regulated entity in the sense that an increase in demand/consumption – a factor not within the control of the regulated entity – will ultimately translate into more revenues for the regulated entity," the PEPOA said.

Ibay said this is mainly the reason why they have to hear the side of the stakeholders. "We have set a schedule for a series of public consultations to get the side of the market players," she said. – Donnabelle Gatdula