Higher power rates loom

Consumers will have to brace themselves anew for higher power rates once the Manila Electric Company (Meralco) asks the Energy Regulatory Commission (ERC) to allow the country’s biggest power distributor to charge its customers an existing P20-billion debt it needs to settle with the National Power Corp. (Napocor).

The amount represents the penalties imposed on Meralco by Napocor for unused but contracted electricity under their 10-year power sales agreement. Meralco unilaterally withdrew its contract with Napocor when it was supposed to get 60 percent of its power supply from the state-run power firm, the remaining 40 percent is being sourced from its independent power producers (IPPs).

The contract was disputed by both parties, resulting in the creation in recent months of an independent mediation panel which ordered Meralco to pay Napocor P27.515 billion for unpaid energy from 2002 up to 2004.

Napocor on the other hand, will pay Meralco P7.465 billion for transmission delays. This brings Meralco’s net payment to Napocor to P20.05 billion.

Meralco senior vice president and chief of utility economics Ivanna G. dela Pena said the company and Napocor will shortly file a joint petition with the ERC that will allow both parties to recover the amount.

Meralco president and chief operating officer Jesus P. Francisco said the amount the company has to settle will not affect the company’s projections of a P1-billion net income this year.

"This will not have an impact on our bottomline since the amount will be passed on to customers," said Francisco.

But Francisco stressed that passing on to customers Meralco’s obligation will not translate into higher power rates.

"Once our own independent power producers like Sta. Rita and San Lorenzo will be fully dispatched, the resulting lower generation costs will offset the additional charges to customers," said Francisco.

Meralco’s plan however, is likely to be met by strong opposition from consumer groups.

The National Association for Electricity Consumers for Reforms Inc. (Nasecore) said it will immediately file its opposition with the ERC once Meralco and Napocor submit their petition.

Nasecore president Pete Ilagan said such move will unnecessarily burden consumers already reeling from expensive power rates.

Ilagan noted that in the recent order of the ERC to unbundle Meralco’s rates, the regulatory body stated that the resulting P3.40 per kwh additional charge already incorporates the compromise agreement between Meralco and Napocor.

Ilagan disputed Meralco’s claims that the additional charges won’t have consumers shelling out more money to pay for their electricity bills.

"The fact is that the rates of Meralco’s IPPs are more expensive than Napocor’s. Meralco charges P2.40 per kwh while Meralco IPPs charge an average of P4.21 per kwh," noted Ilagan.