ERC approves reduction in Meralco distribution charge


POWER distributor Manila Electric Co. (Meralco) will reduce its charges starting this month after the Energy Regulatory Commission (ERC) approved on Friday its petition for provisional authority to lower its distribution, supply and metering charges.

According to the ERC, the new rate is 11.26 percent or 17 centavos per kilowatt hour (kWh) lower than the current average rate of Meralco at P1.55 kWh.

“This is a welcome relief for Meralco’s customers. It will surely mitigate possible increases in the other components of Meralco’s retail rates occasioned by the tight supply condition and Malampaya gas restrictions that were experienced last month,” outgoing ERC Chairperson Zenaida Cruz-Ducut said.

In its application for approval of an interim average rate of P1.39 kWh, Meralco proposed to reduce its current rate by removing the component representing its under-recoveries in the distribution charge for the Second Regulatory Period (July 2007 to June 2011).

The ERC made  a further reduction of  12 centavos per kWh to remove the  allowance for  net  efficiency, which   was  embedded in  its rates   for  the  Third   Regulatory  Period  (July   2011 to  June  2015).

The regulatory body also provisionally allowed the implementation of the interim average rate  of P1.38 kWh,  subject  to  its  final decision after the hearings  are concluded.

The P1.38 kWh reduction is broken down to P1.01 kWh for the distribution charge, 22 centavos per kWh for the supply charge, and 14 centavos per kWh for the metering charge.

The ERC said the move ensures that Meralco will not over-collect from its customers for its previous under-recoveries  and allowed net  efficiency adjustments.

The ERC determines what Meralco’s appropriate rate should be starting in the July 2015 billing period.

Meralco earlier said it was ready to implement a lower distribution charge this July upon receipt of the order from the ERC approving the application it had earlier filed.

The company expressed the hope that the reduction in distribution charge would offset the increase in the generation charge for this month.

Meralco said the generation charge for this month is likely to go up due to higher prices at the Wholesale Electricity Spot Market (WESM) for the June supply month. Meralco estimates the generation charge will go up by 25 to 30 centavos per kWh this month.


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