ERC supports Meralco plan to reduce cost of generating power

THE Energy Regulatory Commission (ERC) said it supports Manila Electric Co.’s (Meralco) proposal to mitigate the expected surge in generation charges for the May billing period.

In a statement late Monday, the ERC said Meralco had initially projected generation charge to increase by around P1.0277 per kilowatt-hour (kWh).

Lawrence S. Fernandez, vice-president and head of utility economics at Meralco, said via Viber that a significant contributor to the increase in generation cost was higher line rental charges.

The line rental charge is the transmission-related cost component included in generation charges that is passed on to consumers. 

However, Meralco’s power supply agreements (PSAs) with generators caps the line rental charge for energy delivered any charges exceeding the cap is absorbed by generators and later adjusted in settlements.

To soften the impact of higher power rates, Meralco told the regulator that it will immediately apply the adjustments to the line rental charge that power generators are required to shoulder.

“For this cycle, we’ll deduct the excess immediately. Amount will be absorbed by generation companies. This is protection for end-users that’s contained in Meralco’s ERC-approved PSAs,” Mr. Fernandez said.

While the ERC raised no objection, the mechanism is subject to verification, review, and submission of complete supporting documents and reporting requirements.

“We understand the burden (of) rising electricity prices… especially during periods of global uncertainty and increasing fuel costs,” ERC Chairman and Chief Executive Officer Francis Saturnino C. Juan  said.

Mr. Juan said the regulator continues to work closely with distribution utilities to identify measures that can help reduce the impact on consumers.

“While some costs are driven by international fuel prices and market conditions beyond domestic control, the ERC remains committed to ensuring that all charges passed on to consumers are properly reviewed, transparent, and reasonable,” he said.

“We will continue to pursue timely interventions that balance consumer protection, reliable electricity service, and energy security,” he added.

Meralco is the country’s largest private electric distribution utility, serving more than 8.1 million customers in Metro Manila and nearby provinces, including Bulacan, Cavite, Rizal, and parts of Laguna, Batangas, Pampanga and Quezon.

Its controlling shareholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera