By MYRNA M. VELASCO
The Energy Regulatory Commission (ERC) is being asked to explain to the 4.0 million customers of Manila Electric Company (Meralco) the hasty approval of a P0.28 per kilowatt-hour (kWh) increase in the utility firm’s generation charge as reflected in November and December billings, despite assurances from energy officials then that the higher trading prices in the Wholesale Electricity Spot Market (WESM) will not result in more expensive electricity bills for consumers.
"The ERC has to explain why it approved the P0.28 per kWh adjustment for Meralco even before the board of PEMC (Philippine Electricity Market Corporation) released the result of the investigation on alleged price manipulation in the WESM," a ranking energy official said.
Meralco vice president and utility economics Ivanna G. dela Peña confirmed that there was a November 2006 increase of P0.28 per kWh in their generation charge based on a provisional authority (PA) issued by the ERC. The rate increase was already carried in the bills even as public hearings are still ongoing on this rate application.
The prior adjustments were only traced when the regulatory body released another ruling authorizing another P0.2614 per kWh increase in the utility firm’s generation charge to reflect October prices and was ordered to be reflected in January 2007 bills.
Meralco claimed that the net effect of the rate adjustment for October was a P0.02 per kWh reduction in the January bills, simply because there were already previous increases of P0.28 per kWh.
From a generation charge of P4.4290 per kWh in August 2006 (which was used as the reference), the rates in November went up to P4.71 per kWh and sustained at that level in December 2006, but this ruling was never released to the media by ERC. The mandated generation charge for January 2007 is P4.6904 per kWh.
It would be noted that the ERC approved the initial P0.28 per kWh increase in the light of assurances by Energy secretary Raphael P.M. Lotilla and PEMC president Lasse A. Holopainen that the consumers will not bear price increases due to the surge in trading prices at the WESM. Prior to the spot market price surges in August 26-September 25 and September 26-October 25 billing cycles, the prices in the WESM were on dramatic downtrends.
The energy officials also apprised consumers that electricity prices will not move until the completion of the investigation on the alleged WESM price manipulation, which was due November 17, 2006 and the announcement of result by the PEM Board on November 21.
To ensure this, PEMC actually brought down WESM prices to the level of the second month of its commercial operation in its announcement last December. The WESM price for August 26-September 25 billing cycle was cut down to P3.22 per kWh instead of P4.85 per kWh; and P3.09 per kWh for September 26-October 25 billing cycle instead of P6.77 per kWh.
Meralco claimed that ERC invoked automatic adjustment in the generation charges. It would be noted though that this policy on automatic recovery was suspended by ERC in its Order issued September 1, 2006.
In that Order, the regulatory body stated that "Meralco should stop collecting from its consumers adjustments in its generation charge authorized under an automatic mechanism. The recovery of said adjustments should be implemented after its filing of appropriate application."
In December, however, ERC came up with another policy pronouncement that the suspension was only applied to the confirmation process and not to the cost recovery.
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