Power rate in Metro Manila, nearby areas to increase

MANILA, Philippines - Electricity rates in Metro Manila and nearby provinces are set to increase by around two centavos per kilwatthour (kwh) next month.

The Manila Electric Co. or Meralco has been allowed by the Energy Regulatory Commission (ERC) to raise electricity rates to enable it to recoup some P1.9-billion worth of under-recoveries it incurred while implementing its lifeline charge and inter-class cross subsidy.

The ERC said Meralco would carry out the recovery over four years.

“The imposition of the additional rates is expected to last for four years only and as soon as the full amount of the under-recoveries is recovered, Meralco shall desist from further collecting the same,” ERC said.

For consumers with 200 kwh consumption, the increase will be P4 per month.

In a decision signed last Nov. 16, ERC said Meralco has incurred some P856.36 million under-recoveries or equivalent to 0.68 centavos per kwh. The approved recovery amount is lower than the P863.95-million applied for by Meralco.

The lifeline charge subsidizes the discounts for lifeline customers. This charge is fixed based on assumed kwh consumption of lifeline customers and kwh sales to non-lifeline customers.

When the amounts collected from the lifeline customers are not sufficient, either because there is an increase in the kwh consumption of the lifeline customers or a reduction in the kwh sales to the non-life customers or a combination of these factors, Meralco is constrained to shoulder the shortfall.

“Given that the implementation of the lifeline charge should be revenue neutral to Meralco, in such cases, Meralco incurs an under-recovery in the implementation of the lifeline charge,” ERC said.

Meanwhile, ERC also allowed Meralco to collect from its customers some P1.048-billion worth of under-recoveries under the inter-class cross subsidy charge implementation or equivalent to 1.03 centavos per kwh.

ERC said the approved under-recoveries for inter-class subsidy of Meralco are lower than the P1.053-billion applied for.

“The ERC meticulously pored through the various submissions of Meralco and determined that these under-recoveries, which the disallowances it ordered, are part of the just and reasonable costs that the law allows a utility to recover,” ERC executive director Francis Saturnino Juan said.

The power distribution firm filed a petition with the ERC on Feb. 19, 2008 for the recovery of its under-recoveries for the lifeline charge for the period June 2003 to December 2007.