For regulatory year 2010, the distribution charge of Manila Electric Company (Meralco) will go up by P0.269 per kilowatt hour to P1.4917 from P1.2227 per kWh currently based on the approval granted by the Energy Regulatory Commission (ERC), and this will be reflected starting in January billing cycle.

Nevertheless, for the same billing period, the anticipated increase in Meralco bill will be offset by the significant reduction in the utility firm’s generation charge, which will likely average by P0.26 to P0.27 per kWh which will just be enough to offset the rate adjustment for the month.

The adjusted Meralco tariff had been based on its filing for performance-based regulation (PBR) as part of its revenue shoring up measure to sustain viability.

The ERC, in its Order, emphasized that the approved PBR tariff of Meralco for 2010 was lower than the maximum average price of P1.9410 per kWh that the utility firm has applied for.

The rate adjustment, it was noted, “takes into account economic factors such as inflation and foreign exchange rate, as well as the DU’s (distribution utility) actual performance in terms of the approved Performance Incentive Scheme (PIS) and the previous years’ under/over recoveries in its distribution revenues.”

The regulatory body added that “with this resulting increase, following the rovision on side constraints, which mitigates the adjustment that can be allowed for a DU so as to prevent huge price increases for its consumers, Meralco’s 2010 rate was subjected to a ceiling computed at P1.4917/kWh.”

Meanwhile, on Meralco customers’ overall bill for January, company executives noted that the overall effect would still be a reduction, with expectations of significant downtrend on its generation cost.

The generation charge though changes on a monthly basis; while the adjusted distribution charge will be in force until the next regulatory reset in year 2011.

Meralco vice president and utility economics head Ivanna G. dela Pena noted that based on estimates, “the generation charge is expected to go down by around 26 to 27 centavos per kwh in January,” following utilization of banked gas by its contracted natural gas-fed power producer.