"That is still pending with the ERC. So, there is no need for us to file for another one while one is still pending," Meralco president Jesus Francisco said in a phone interview on Friday.
Francisco said they are unhappy about the recent credit rating made by Standard & Poor’s which downgraded Meralco’s foreign currency rating to ‘CCC’ from ‘B-’. The outlook on the rating is negative.
"That’s their job to assess our capability so we can’t do anything. We just have to improve our financials," Francisco said.
S & P’s director of corporate and infrastructure ratings Mary Ellen Olson said "unless Meralco is awarded a significant rate increase, implementing this level of refund, even over a nine-year period, will put further pressure on the company’s liquidity position."
The power utility firm expects to refinance short-term debts due and to secure a rate increase to offset rising financial obligations.
According to Olson, these favorable developments are not yet certain for Meralco. "Under Meralco’s plan, an average one-time refund of P700 per customer will be implemented in June 2003. This refund, in conjunction with Meralco’s heavy debt burden, will materially stress liquidity and could make it difficult for the company to meet its financial commitments during the year. The company is expecting a rate increase from the commission to counter the impact of the refund," Olson said.
Francisco said Meralco is expecting that the ERC will grant its motion for reconsideration on unbundling petition. "There are no indications that it will not be approved. It would be speculative on our part on what move to take next if and when the ERC does not grant our motion. That’s very speculative. We would rather wait until act on it," the Meralco chief said.
In March this year, the ERC approved a five-centavo per kilowatt hour (kWh) increase in the basic rate of Meralco; on top of the 8.75 centavos per kwh rate escalation that would account for its deferred purchased power adjustment (PPA) charges which has already been allowed for recovery.
Meralco sought the ERC’s reconsideration days after the ruling came out.
Meralco originally asked for a P1.12 per kwh increase under its unbundling rate application based on the adjustment of its financial statement to year 2000 from its last increase in 1994.
In a 104-page decision, the regulator noted that it has taken in its ruling as a representative the residential end-users with 200-kwh consumption; and the resulting increase based on the assessed unbundling application of Meralco is P0.04 per kwh from P5.87 per kwh.
"A comparison of the estimated impact of all adjustments in the revenue requirement on the monthly bill of a residential end-user consuming 200 kwh monthly, using the rate base of Meralco’s actual existing rate as of December 2002 as against the unbundled rates, the Commission has approved a rate increase of P0.04 per kwh," the ERC said, in its order.