Meralco to raise distribution charge this month

By: Riza T. Olchondra, July 5th, 2013 04:33 AM

FILE PHOTO

MANILA, Philippines—Manila Electric Co. (Meralco) is set to implement an increase of 2.54 centavos per kilowatt-hour (kWh) on the distribution charge from this month to June 2014.

The increase is equivalent to P5 a month for consumers using 200 kWh a month.

The distribution charge accounts for less than one-fifth of a Meralco customer’s monthly electricity bill. The largest component, the generation charge, takes up almost 60 percent and is announced monthly. The generation charge for July is set to be announced next week.

In a disclosure to the Philippine Stock Exchange, Meralco said it had received an order from the Energy Regulatory Commission (ERC) approving a new distribution rate to be implemented from July 1 to June 30, 2014.

The order said the ERC provisionally approved the filing of Meralco on the prescribed distribution rate structure for its various customer classes.

“Accordingly, Meralco is directed to implement in its billing cycle the approved distribution, supply and metering charges,” the ERC order said.

The order noted that the approved rate was based on a “reasonable estimate” that factored in the distribution cost per kWh, on actual sales data in the review period (the year preceding the new implementation period) and on the projected sales for the implementation period.

Last year (the review period for 2013), it was assumed that there would be a certain number in kilowatt-hour sales, which was equivalent to P1.6303/kWh. However, the actual sales mix translated to just P1.6220/kWh, which resulted in an underrecovery of 0.83 centavo.

The ERC order also noted that the new maximum rate approved for the implementation period was P1.6474/kWh, a difference of 1.71 centavos/kWh from the previous rate.

The combination of the underrecovered 0.83 centavo/KWh and the difference of the new rate with the previous one (1.71 centavos/kWh) resulted in an increase of 2.54 centavos/kWh, which will be reflected in Meralco’s distribution charge for one year starting this month.

ERC Executive Director Francis Saturnino Juan said via phone patch: “If you convert that to a peso amount, that shows the approved revenue requirement. What happened was that actual sales, based on the September 2012 supply mix, were lower than the projected sales. It was the equivalent of P1.6220/kWh.

“So the revenue requirement was not met. There was a shortfall in revenue, which has to be recovered. The difference shows underrecovery for this year.”

The biggest factor in a Meralco customer’s monthly bill, taking up 58.2 percent, is the generation charge or cost of electricity sold by power producers and is announced monthly.

For example, in June, Meralco said the generation charge grew by 19 centavos per kWh to P5.66 per kWh compared with the previous month’s rate. Still, this was 48 centavos lower than the generation charge in June 2012.

Transmission charges, which account for 10.1 percent of a customer’s monthly bill, went up by 2 centavos per kWh on higher service charges incurred by National Grid Corp. of the Philippines from generators. Taxes, taking up 10.1 percent, increased by P1.50 per kWh.

System losses account for 5.4 percent of the total charges and the rest, or 16.2 percent, go to Meralco.

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