Meralco to start billing on time-of-use rates

Manila Electric Co. (Meralco) can now start implementing time-of-use (TOU) rates, according to Energy Regulatory Commission (ERC) chairman Rodolfo Albano Jr.

“A provisional authority (PA) for Meralco’s TOU rate application was granted in our last commission meeting.  The rate that they applied was granted,” he said.

A TOU rate is an alternative pricing mechanism that approximates the cost of electricity at different time periods during the day and the different seasons of the year. The rates reflect the cost of generation at the specific time periods.

TOU pricing generally consists of two time periods — the peak and the off-peak periods. Peak periods are hours of the day when the demand for electricity is high, thus generation prices are substantially higher than charges during off-peak periods.

Under the TOU scheme, peak and off-peak periods are also differentiated between weekdays and weekends and also vary during the wet (July to December) and dry (January to June) seasons.

The scheme would allow Meralco customers the option of managing their electricity use. For example, they could schedule most of their activities like ironing clothes during off-peak hours.

Electricity prices are lowest during off-peak hours  — from 10 p.m. to 7 a.m., and highest during peak hours — from  10 a.m. to 4 p.m. and from 6 p.m. to 9 p.m.

Last April, Meralco filed with the ERC its application for the TOU retail rates to end-users. Under its application, Meralco’s TOU will be implemented on a voluntary basis in different phases.

Phase I will be available to industrial and non-industrial customers with a monthly average peak demand of at least 750 kilowatts for the preceding 12 months and to residential customers with a 12-month average consumption of at least 2000 kilowatt-hours (kwh), prior to the date of their application for TOU rates.

For phase II, the level will be reduced to 1,000 kwh for residential customers. Thereafter, the next or succeeding phase/s shall be proposed depending on the result of the implementation of Phases I and II.

Under Meralco’s application, the TOU rate for peak hours is P6.4852 per kwh from Monday to Sunday (January to June) and P6.1053 per kwh (July to December) versus an off peak rate of P3.0925 per kwh.

Meralco said the adoption of the TOU pricing scheme is intended to provide end-users with the price signals on the efficient use of generation facilities. It gives an incentive for customers to shift load from peak to off-peak periods because of the price differential.

The country’s biggest power distributor added that the implementation of TOU rates will require acquisition and installation of electricity meters with time stamping capability or “TOU programmable” meters. These type of meters  would cost about P8,200 per meter, including programming cost.