Meralco time-of-use pricing is higher than Napocor rates

Manila Electric Co. (Meralco) is seeking a higher time-of-use (TOU) pricing scheme compared to that approved for the state-run National Power Corp. (Napocor).

Meralco buys 40 to 50 percent of its power requirements from Napocor while the rest is supplied by its own independent power producers (IPPs) owned by its affiliates, First Gas and Quezon Power.

Based on Meralco’s petition with the Energy Regulatory Commission (ERC), it would apply three different TOU generation rates, which the power distributor said reflect the cost of electricity it buys from Napocor and its IPPs.

These are two peak rates of P6.5754 per kilowatthour (kwh) for the first semester and P6.1565/kwh for the second semester and a year-round off-peak rate of P3.1086/kwh.

Meralco’s petition, however, was not specific about the times these rates will prevail and whether rates during weekdays will be different during weekends.

On the other hand, Napocor’s TOU rate structure as approved by ERC comprises a four-tiered peak rate structure – P5.0799, P5.3108, P5.5190 and P6.061/kwh. Napocor also has four off-peak rates: P1.8744, P2.0340, P2.1574, and P2.7192/kwh.

The specific hours during which the rates are being charged by Napocor to electric distributors and its directly-connected customers differ during the first semester and the second semester. Peak rates are from 9 a.m. to 9 p.m. during the first semester and from 10 a.m. to 9 p.m. during the second semester. Its rates are also lower during Sundays.

Meralco customers who opt not to avail of the TOU scheme will be charged an average generation rate of P4.93/kwh for the first semester and P4.74/kwh for the second semester.

In contrast, Napocor’s basic generation rate as approved by ERC last April is P4.4080/kwh.

Meralco has proposed to implement TOU in phases – with Phase I covering commercial and industrial users with power requirements of at least one megawatt (MW) and residential customers with monthly consumptions of at least 2,000 kwh. Phase I will cover a total of 11,529 customers with aggregate annual consumption of six billion kwh, representing 25 percent of Meralco’s total electricity sales in 2004. Phase 2 will cover commercial and industrial customers and residential customers.

Customers covered by these two phases consume close to eight billion kwh annually, or one-third of Meralco’s electricity sales for 2004.

A generation charge adjustment will be added or subtracted from the basic TOU generation charges to reflect monthly movements in generation cost as well as other generation charge adjustments.

Meralco earlier said that applying TOU for its 3.9 million residential customers alone will cost the company at least P32 billion for installing new meters.

Meralco said the implementation of TOU rates require reprogramming of the meter reading device to capture the meter readings from the different TOU time zones.

It added that the introduction of several time zones under a TOU rate implementation will dramatically affect meter reading timeliness, whether it be through manual meter reading or remote meter reading.

The power distribution firm is asking the ERC to give it "reasonable lead time" to implement the TOU pricing scheme which means by end December or earlier than January 2006.