Meralco: July rates may drop

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MANILA, Philippines–The Manila Electric Co.’s (Meralco) customers may be able to enjoy electricity savings starting July as regulators provisionally approved a distribution charge cut for the country’s largest distribution utility.

While the distribution charge takes up less than a fifth of a Meralco customer’s monthly electricity bill, this could translate to lower billings if other factors remain equal or trend lower. The largest component, the generation charge, takes up almost 60 percent and is announced monthly. The generation charge for June is set to be announced next month.

In an order, the Energy Regulatory Commission (ERC) said that it gave provisional authority to Meralco to implement lower distribution charges to an average of P1.5562 per kilowatt-hour during the next regulatory year from the current P1.6474 per kWh.

The quasijudicial body said that on March 31, Meralco filed an application for the approval of the so-called Maximum Average Price (MAP) for the regulatory year 2015, which starts on July 1, 2014, and ends on June 30, 2015.

“To allow its customers to immediately enjoy the lower distribution rates, it is necessary that a provisional authority be immediately issued authorizing it to implement the proposed rates pending a hearing on the merits of the instant application,” the ERC said.

Given the socialized structure of Meralco rates, the ERC said, the actual amount paid by different customer classes (based on volume usage) differs from the average tariff.

The rate is P1.13 per kWh for residential customers with a monthly consumption of up to 200 kWh; P1.49 for those consuming between 201 and 300 kWh; P1.82 for consumption of between 301 and 400 kWh; and P2.41 for consumption above 400 kWh.

“We will finish the proceedings before the ERC can issue its final decision,” ERC Executive Director Francis Saturnino Juan said in a text message.

In a typical electricity bill, the distribution charge is the line item that refers to the amount collected by Meralco that forms part of the company’s earnings. The generation charge, in contrast, is collected and then passed on to power generation firms, which then earn from it.

While the approval has yet to be finalized and although the distribution charge is only part of customers’ electricity bills, customers could still enjoy savings from the lower rate and get a break from volatile power prices since end-2013.