Utility giant Manila Electric Company (Meralco) is seeking P0.269 per kilowatt-hour (kWh) increase on its distribution charge for regulatory year 2010 to average P1.4917 per kWh from this year’s rate of P1.2227 per kWh.

The proposed rate adjustment, computed as maximum average price (MAP) for energy sales, has been anchored on the performance-based rate setting (PBR) methodology set for Meralco. It casts a forward-looking approach on its tariff adjustments until year 2011; but is being updated yearly based on regulatory requirements or what has been termed as “verification process.”

In its filing with the Energy Regulatory Commission (ERC), Meralco noted that its computed MAP covering the period July 2009 to June 2010 would be P1.4917 per kWh.

“This is the computed rate after the side constraints have been applied to prevent price shocks to customers,” the utility firm has explained.

It added that the application “clearly shows the process of computing the P1.4917 per kWh rate and how this is translated into distinct rates to various customers.”

Among the factors evaluated in updating power utilities’ PBR rates are: inflation as measured by the consumer price index (CPI); the peso-dollar exchange rate; the performance incentives (rewards or fines); and any correction due to previous periods’ under or over-recoveries.

Meralco vice president and utility economics head Ivanna G. dela Peña said the rate adjustment filling “will still undergo public hearings at the ERC.”

She pointed out that “the second component of the filing is the annual rate translation process which allocates the RY (regulatory year) 2010 MAP into distribution, supply and metering charges for various customer categories.”

The company’s annual revenue requirements have already been established in the Final Determination of its PBR-based tariffs approved in 2007. Apart from Meralco, several private distribution utilities also entered the PBR regime, including Cagayan Electric Power and Light Company; Dagupan Electric Corporation; Iligan Light & Power Inc.; Mactan Electric Company; and Cotabato Light and Power Company.