Power rates up next month

Electricity rates are expected to increase by 13 centavos per kilowatt-hour (kwh) starting next month as the Manila Electric Co. (Me-ralco) reported an increase in the cost of power it purchased from its suppliers this month, an advisory from the Department of Energy (DOE) said.

According to the DOE, it will start releasing this kind of advisory as part of its continuing effort to properly inform the public of the developments in the power sector, particularly on the movements of electricity rates.

This electricity rate hike advisory, it said, will be based on a report the Meralco submits to the Energy Regulatory Commission (ERC), which in turn, will be furnished to the DOE.

Based on its latest report, Meralco said its purchased power adjustment (PPA) for January 2003 stood at P2.74 per kwh or up by 13 centavos from the December 2002 rate of P2.61 per kwh.

Meralco president Jesus Francisco said in the same ERC report that the adjustment in electricity rates was due to the increase in the PPA component of the electricity bill.

The increase in PPA, he said, was brought about by the lower consumption of electricity during the colder month of December, and from higher power costs of its own independent power producers (IPPs).

The impact of the adjustments in the December 2002 billing was, however, felt only by consumers in their January 2003 electricity bills given the one-month lag time.

PPA is a cost recovery mechanism being used by Meralco and other power firms to recover changes in the cost of power purchased from its independent power producers.

Meralco sources its power from state-owned National Power Corp. (Napocor) and from its own IPPs such as Duracom, QPPL and First Gas Power Corp.

The Lopez-controlled power distribution firm said the power purchased from Duracom went up by four centavos to P3.57 per kWh while the QPPL, PPA went down by 41.4 centavos due to improvements on capacity factor.

Power purchased from First Gas-Sta. Rita plant, on the other hand, jacked up by 46.8 centavos.

Meanwhile, the rate of First Gas-San Lorenzo plant, which also supplies electricity to Meralco, went down by 32 centavos. Napocor’s PPA, on the other hand, rose by only one-centavo mainly due to the fluctuations of the peso.

Luisa Esteban, head of Napocor’s Electricity Tariff Division, explained that the state-owned firm has stopped implementing its fuel and purchased power cost adjustment (FPCA) mechanism last October when it started implementing its unbundled rates.

Esteban said that when the regulatory body came out with an order to unbundle NPC’s rates, it itemized NPC’s tariff to just two fixed components — the generation charge and the benefits to host communities — and one variable component, the foreign exchange adjustment (FOREX).

This reflects the depreciation or appreciation of the peso against the dollar and the yen covering payment of principal loans as well as maintenance expenses which are foreign-denominated.

"In effect, the FPCA component was removed from our bill. Until the ERC can come up with a decision on what scheme should replace the FPCA component, we cannot pass on any increment in fuel and purchased power costs to our customers," Esteban said.

"Our increases only account for FOREX adjustment, which is very insignificant. FOREX adjustment increased in December by less than a centavo to P0.1708 per kWh from P0.1655 in November," the Napocor official added.

"This means that we have been absorbing whatever is the difference between our actual operating costs and ERC’s approved rate until a new cost recovery formula has been approved," he said.