Any cost recovery proportionate to the temporarily-suspended P0.27 per kilowatt-hour rate hike of utility giant Manila Electric Company (Meralco) will be deferred to regulatory year 2011, the Energy Regulatory Commission (ERC) said.

“Whatever amount that they cannot pass on from their PBR (performance-based ratesetting) adjustment this year will be included in their MAP (maximum average price) computation next year,” ERC executive director Francis Saturnino Juan said.

The utility firm moved for the voluntarily suspension of its PBR-based rate adjustment pending the resolution of a motion filed by one of the case’s intervenors, Engineer Robert F. Mallilin.

Juan noted that the fundamental concern raised by Mallilin rests on presumptions that the Meralco rate adjustment for industrial end-users can still be lowered.

“We are carefully evaluating that – because given that if there is really a room to bring down industrial rates, it might be the residential end-users who may be unduly burdened with higher rates,” the ERC official stressed.

Meralco first vice president and utility economics head Ivanna G. dela Peña qualified that “the suspension is temporary until such time that the issues are resolved.”

While expected revenue flows will be partly affected, executives from the utility firm indicated that the capital expenditure program for projects they lined up for 2010 will still be pursued.

The ERC had calendared last Friday (February 5) the public hearing for the PBR adjustment suspension based on the motion of the Meralco case’s intervenor.

ERC chairperson Zenaida G. Cruz-Ducut invited parties of record in the case to participate in the public hearing, as such would be an important exercise leading to the resolution of the questions raised.

The ERC added that “a delay in the implementation of rates may result to under-recoveries,” yet it was specified that “under the rules for the implementation of the PBR, under-recoveries are allowed to be recovered in the succeeding regulatory years and subject to an interest or cost of money rate.”

Juan though qualified that since Meralco moved for voluntary suspension of its PBR adjustment, it may not be allowed to impose interest charges for the deferred cost recoveries.

“Since the deferment is upon its request, the ERC ruled that Meralco shall not be entitled to any interest on under-recoveries that it shall experience by reason of this deferment,” the regulatory body noted further.