Meralco seeks ERC okay for recovery of P14B

After reporting a 43-centavo drop in generation charge for August, the Manila Electric Co. (Meralco), the country’s largest private power distributor, is seeking the approval of the Energy Regulatory Commission (ERC) to recover some P14 billion worth of under-recoveries since September 2006.

In its numerous rate applications filed with the ERC, Meralco said it needs to recover some P13 billion worth of deferred generation charge adjustments and  P1 billion will be for under-recoveries on system loss charges.

Meralco informed ERC that on top of the P14 billion, it has yet to file for the recoup of some P8 billion under-recoveries for transmission charges and lifeline subsidy rates.

If approved by ERC, this means that Meralco customers would have to be ready for a series of power rate hikes in the coming months.

“The recovery period will be spread and it could be stretched for nine months, 12 months or 18 months depending on the assessment of the ERC,” Meralco president Jesus P. Francisco said.

Generation charges are pass-through costs which Meralco collects and remits to its power suppliers like National Power Corp. (Napocor), contracted independent power producers and the Wholesale Electricity Spot Market.

From September’s generation charge of P4.6904 per kilowatthour (kWh), the proposed cost recoveries shall start with October 2006 billing cycle wherein

Meralco applied for generation rate adjustment of P1.04 per kWh to P5.7334, including recovery for system loss charges.

For the month of November last year recovery, Meralco said it would need to increase its generation charge by P1.4434 per kWh to P7.1770 including system loss charges.

For December last year, the estimated generation charge plus system loss charges were at P6.4421 per kWh.

Meralco said this should have been lower by P0.7549 per kWh as compared to November charges. However, the rates were capped at P4.42 per kWh, thus this would mean an increase in the generation charge billed to consumers.

The capping of Meralco’s generation charges at P4.42 per kWh was technically implemented since September 2006 due to a Supreme Court ruling nullifying the policy on automatic adjustments for cost recoveries even those beyond the control of distribution utilities, such as generation charges.