ERC to decide on rate hike, bill refunds next yr

MANILA, Philippines - The energy sector regulator is set to decide on two key issues early next year that will result in rate hikes and electricity bill refunds, an official said.

The Energy Regulatory Commission (ERC) is already evaluating the petition for higher rates through the universal charge and is reviewing the Magna Carta for the payment of interest on bill deposits.

“We recognize that Power Sector Assets and Liabilities Management Corp. (PSALM) is urgently requesting for a resolution to these applications but we are saddled with other cases that are equally important,” said ERC executive director Francis Saturnino C. Juan.

The case will be deliberated upon by the ERC and can be resolved next year.

PSALM wants to charge P0.0313 per kilowatt-hour (kWh) and P0.3666 per kWh to collect funds for stranded debts and stranded contract costs, respectively, in the next four years. The two petitions were filed with the ERC in June 2011.

“Both cases were submitted for decision. These are interrelated so these will both be taken up,” Juan said.

PSALM wants to extend the collection of the universal charge to as much as 25 years to lower the add-on rates to P0.065 from P0.07 per kWh.

“Depending on the rates that will be approved and actual cash inflows to PSALM, there can be annual adjustments thereafter so the actual collections from the universal charge will not be far as targeted to pay maturing obligations of PSALM,” Juan said.

Debts of PSALM, the state-owned firm in charge of privatizing government power assets as well as managing the National Power Corp.’s power plants and debt, is estimated at $18 billion.

Meanwhile, the ERC will also decide on revisions in the Magna Carta for Residential Electricity Consumers, specifically the bill deposits of Manila Electric Co. (Meralco).

“Other issues for review will be Meralco’s implementation of the Magna Carta provision,” Juan said adding that “the way forward is to conduct further studies on these issues and come out with revisions in the Magna Carta.”

Meralco charges its new customers varying amounts as deposit for future bills, specifically to cover potential non-payments of bills.

The amount can be redeemed once a customer terminates the services of the power distributor.

However, the company was not able to pay the interest on the bill deposits for eight years.

“There is no decision yet from the Commission whether or not to accept that explanation for the delay so there is still an administrative case that can be initiated against Meralco for that delay,” Juan said.

Juan said Meralco explained that the delay resulted from operational difficulties as it implements refunds a few years ago.

Roughly 1.5 million customers of Meralco will receive more than P1 billion as interest on their bill deposits this month.

“If distribution utilities benefit out of the proceeds of these bill deposits, they should pay the appropriate cost of money for these amounts it has access to,” Juan said.