By MYRNA M. VELASCO
Any prohibition that may be triggered by Supreme Court ruling on the recovery of costs relating to purchase of power supply subsequently served to end-consumers is seen causing financial disaster to power distribution utilities.
This has been the argument impressed upon by the Private Electric Power Operators Association (PEPOA) in a motion for intervention it filed with the high court in a pending case stopping Manila Electric Company (Meralco) from recovering adjustments due to the Generation Rate Adjustment Mechanism (GRAM) as lodged by petitioner National Association of Electricity Consumers for Reforms.
The cost of purchased power has been held as the single biggest operating expense of the distribution utilities, accounting for roughly 80 percent of their revenues and about 90 percent of their total operating expenses.
In this vein, barring them recovery of cost adjustments will force them to advance and carry the full cost of their purchased power; or in cases of not having timely recovery, "the sources of funds to cover for the increased cost of purchased power would dry up and the distribution utilities would most likely default on their payments" to suppliers National Power Corporation (NPC) and independent power producers.
Predicating its argument that GRAM cost recovery is pertinently covered by the provision of Section 4(e) Rule 3 of the implementing rules and regulations (IRR) of the Electric Power Industry Reform Act (EPIRA) which refers to "any application or petition for rate adjustment," Nasecore opined that such does not discriminate on the GRAM recovery; thus all requirements relating to rate applications, such as publications shall be complied with.
On grounds of non-publication of its GRAM application, Meralco was stopped from recovering about P0.13 per kwh adjustment in purchased power costs.
Given the same predicament, power distributors affiliated with PEPOA indicated that the ruling "will adversely affect not only Meralco, but also all distribution utilities, and that grave an irreparable injury will be suffered by the distribution utilities, if the subject decision is affirmed."
The power distribution companies serve as the direct connection point to customers; extending services to homes and businesses through their distribution wires.
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