Energy Regulatory Commission (ERC ) Executive Director Francis Saturnino Juan made the power rate hike announcement alongside Meralco’s disclosure of its decision to reduce its generation charge to be billed to its customers this month by P0.27 per kWh to P4.7081 per kWh from the December billing of P4.9781.

“We will be implementing changes in the generation, transmission, and distribution charges. For our consumers, this will mean a net reduction of around 27 centavos per kWh in their electric rates (for the month of December),” according to Meralco spokesman Joe Zaldarriaga He explained the reduction in the generation charge for December stemmed from the similar drop in the cost of power Meralco buys from state-controlled National Power Corporation (Napocor).

“Power purchased from the National Power Corporation (Napocor) and independent power producers (IPPs) went down 30 centavos per kWh and an estimated 24 centavos per kWh, respectively. These more than offset higher rates from the Wholesale Electricity Spot Market (WESM),” said Zaldarriaga.

Meralco sourced around 41 percent of its supply from Napocor, 35 percent from First Gas Power Corp., and 12 percent from Quezon Power Phils Ltd. The remaining 12 percent came from the WESM, the country's trading floor of electricity.

However, it must be noted that the P0.1547 per kWh increase will be constant for the rest of the year; while the generation charge will be reflected only once as this rate component changes on a monthly basis.

The rate increase had been based on the ruling rendered by the ERC on the company’s updated tariff structure for regulatory year 2011 under its filing for performance-based rate setting (PBR) methodology.

Under PBR, which is prescribed for all private distribution utilities, electric distributors have to maintain a mandated level of service to consumers. Their rates may be reduced or adjusted, depending upon their performance against standards set by the regulator.

Meralco has actually applied for a higher rate than what was allowed by the ERC.

It was pointed out in the decision that the allowed rate adjustment had been one peso lower “than the unconstrained level applied for, with the application of the provision on side constraints in the ERC’s rules for the setting of the distribution utilities’ wheeling rates or RDWR.”

Juan explained that “side constraints are embedded in the RDWR to temper any upward price adjustments and, thus, prevent customers from experiencing price shocks.”

“Customers should be given value for the money they pay while utilities should be assured of rates that would allow them to operate efficiently,” Juan added.

As can be culled from the 27-page decision of the Commission, it was stipulated that residential consumers with usage of 400 kilowatt hours and above will bear the highest increase of P0.1945 per kWh.

Those with consumption in the 301-to- 400 kWh bracket will see an increase of P0.1399 per kWh in the distribution charge; while those with lower consumption of 201 to300 kWh will shoulder a rate hike of P0.1085 per kWh; and P0.0753 per kWh for those with up to 200 kWh of usage.

It was similarly specified in the ruling that the approved P.16464- per- kWh average tariff of the utility firm will be broken down as follows: distribution charge at P1.0980 per kWh; supply charge at P0.3358 per kWh; and metering charge at P0.2126 per kWh.

The estimated tariff, according to the ERC, has been lower, compared to the higher P2.6943 per kWh maximum average price (MAP) as applied for by the power distribution company.

Myrna Velasco, Manila Bulletin