The Manila Electric Company (Meralco) will impose higher charges to its consumers next month as regulators have finally given their approval to the power distributor’s proposed adjustment in distribution rates.
In a decision, the Energy Regulatory Commission (ERC) allowed Meralco to finally implement adjustments in its distribution tariff.
The ERC then set Meralco’s maximum average price (MAP) for 2014 at P1.6474 per kilowatt-hour up by P0.0171 from P1.6303 per kilowatt-hour. This approved adjustment, however, is lower than the P1.6510 per kilowatt-hour hike initially proposed by Meralco.
ERC cited in its decision that Meralco alleged this tariff increase will “enable it to immediately implement in a timely manner its capital expenditure program and address its operating and maintenance requirements” for the 2014 regulatory period, which runs from July 31, 2013 to June 30, 2014.
Meralco also said in its filing that the approval of its application will “avert financial prejudice to both the applicant and its consumers, as it is necessary that the provisional authority be immediately issued.”
Moreover, the approved average rate is lower than what Meralco had applied for because the ERC took into account an updated sales mix due to growth in the utility’s industrial customers. In general, households in the Meralco franchise areas will shoulder an increase of P0.0280 per kilowatt-hour.
Broken down, from P1.1945 per kWh in 2013, Meralco is proposing that residential customers consuming up to 200 kWh be charged P1.2225 in 2014.
For those who consume 201 to 300 kWh, the utility will start charging them P1.5798 per kWh next year from the previous rate of P1.5518 per kWh, while for the consumers that usually exhaust 400 kWhs and above, Meralco will charge them rate at P2.5043 from P2.4763 this year.
According to ERC, Meralco is allowed to adjust its rates based on the spending requirements approved by them. Meralco originally asked the ERC to provisionally approve the price adjustment this month.
Meralco filed the application in accordance with the Performance Based Regulation Rate or PBR setting methodology adopted by the Commission pursuant to Section 43 of the Electric Power Industry Reform Act of 2001.
Distribution utilities are required to undergo a verification of rates, public hearings and regulatory scrutiny that considers such factors as the utilities performance against the mandated technical and customer service standards under the PBR.