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ERC: Meralco can hike rates sans gov’t prior OK

/ 12:26 PM December 05, 2013

Pedestrians walk past a Meralco sign in suburban Manila in this file photo. AFP FILE PHOTO

MANILA, Philippines – The Energy Regulatory Commission (ERC) on Thursday said Manila Electric Co. (Meralco) may immediately implement a rate hike in electricity costs without asking for their approval.

“Meralco and other distribution utilities can implement right away their calculated adjustment and what ERC does is just do a confirmation after these adjustments have already been implemented,” said ERC Executive Director Francis Saturnino Juan over Radio Inquirer 990AM.

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Juan’s statement came after Meralco announced their decision to increase its generation charge by P2 to P3 per kilowatt-hour.

He said the Commission’s review of the price increase was similar to a post-audit, after the new generation charge has been reflected in the electricity bill of Meralco customers.

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“Then we issue a decision whether or not there is an over or under recovery in the implementation of the adjustment,” he said.

Juan said the ERC’s mandate is to regulate the calculation of the generation charge through the review of contracts between distribution utilities and power generation companies. The contract should stipulate what costs may be included in the utilities’ generation charge.

“However for the purchases of utilities from the Wholesale Electricity Spot Market (WESM) these are already beyond the price regulation authority of the ERC,” he said, adding that prices are determined by the supply and demand in the market.

The WESM is a spot market for trading electricity in the Philippines. With the Malampaya Power Plant shutdown because of repairs, Meralco earlier said they were forced to augment their energy supplies from the WESM and the more expensive liquid fuel.

The Malampaya natural gas plant is currently undergoing a maintenance shutdown that will end on December 10.

For now, Juan said the ERC will look into mitigating measures to “soften the impact of the (price) adjustment.”

He assured the public that the price of electricity will go down and normalize once the Malampaya plant re-opens.

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But many are already protesting the planned hike. Labor group Kilusang Mayo Uno on Thursday morning picketed the Meralco business center in Quezon City to oppose the “company’s plan to impose a record-high power rate hike for December.

In a statement, the workers said the P2.50 to P3.00 per KwH rate hike is an “immense burden for consumers,” and could amount to a monthly bill of P700 monthly rate for families that consume 200 KwH per month.

The group said the problem lies with the “privatized and deregulated setup of the country’s power industry, as mandated by the Electric Power Industry Reform Act or Epira, which allows Meralco to pass business expansion costs on to consumers and hike power rates at will.”

Meanwhile, Malacañang on Wednesday said the planned rate adjustment was neither arbitrary nor unreasonable.

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Meralco price hike reasonable, says Palace

Meralco hikes rates by up to P3 per kWh

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