ERC to ask WESM to recompute December, January generation charges

MANILA, Philippines—Citing market failure, the Energy Regulatory Commission has directed the operator of the Wholesale Electricity Spot Market to recompute the generation charges it imposed on customers of the Manila Electric Co. last December and January.

ERC director Francis Saturnino Juan said at a news briefing the quasi-judicial body has issued an order voiding the electricity spot market prices that were implemented in December 2013 and January 2014, saying it expected the recalculation to more than halve the increases in generation charges that Meralco passed on to its consumers before the Supreme Court stopped it from collecting the higher electricity rates.

Juan said the ERC directed Philippine Electricity Market Corp. (PEMC), operator of the Wholesale Electricity Spot Market, to recalculate the prices during the period in question and issue a new billing to Meralco.

The order was to be delivered later Tuesday, with PEMC given seven days to come up with a new computation.

Based on ERC’s own simulation, the WESM prices for the period may drop by “more than half,” according to Juan. This means the WESM component of the pass-through generation cost and related charges would also go down. However, the actual WESM price will come from PEMC and the actual impact on Meralco bills will have to be determined by the distribution utility, Juan said.

The P4.15/kWh hike in the December billing is the subject of an extended temporary restraining order issued by the Supreme Court. Out of the total deferred increase, generation charges accounted for P3.44/kWh and the rest were from taxes and related charges. In turn, out of the P3.44/kWh, WESM alone accounted for P2.38/kWh and P1.04/kWh was from fuel cost as three plants supplied by Malampaya had to use more expensive alternative fuel.

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