July power rates expected to be little changed

ELECTRICITY RATES for Metro Manila households in July are likely to be flat, according to Manila Electric Co. (Meralco).

Electricity charges for almost 7 million customers of the listed distribution utility fell in the previous two months due to its relaxed power supply agreements with generators.

“For now, the indications are that rates will be flattish after two consecutive months of reductions,” Lawrence S. Fernandez, Meralco’s head of utility economics, told BusinessWorld Wednesday.

Recently, the Energy Regulatory Commission (ERC) approved adjustments to the utility’s December 2019 contract rates with power suppliers, the amount of which may be back billed to its customers.

Mr. Fernandez said Meralco is still discussing with partner generation companies how to implement the adjustments, which may affect the power rates in the succeeding months.

Last month, the ERC approved four separate motions of reconsideration filed by Meralco and its partner power generators to alter their supply contracts. Three of these contracts are with power plant companies under San Miguel Corporation (SMC), while the other is with Ayala-led AC Energy Philippines, Inc.

Two of Meralco’s supply agreements with South Premier Power Corp. (SPPC) and one with San Miguel Energy Corp. were revised to adjust the applicable rate, which now considers the plant capacity factor and escalation provision in the computation. The rate in one of the contracts with SPPC was raised to P4.8525 per kilowatt-hour (kWh) from the previous P4.0459/kwh.

Meanwhile, the contract rate for AC Energy, which now takes into account the plant capacity factor, was also increased to P4.9873/kWh from P4.2366/kWh in the previously-approved PSA.

Consumer group Laban Konsyumer on Tuesday warned that Meralco’s supply contracts with the SMC-owned power plants will increase the generation component of electricity bills.

Victorio A. Dimagiba, the group’s president, urged the ERC to “take a direct hand” in monitoring possible back billing by the power generators and to consider the amount to be amortized to reduce its impact on consumers.

“We hope all these rate increases can be looked into, and we hope that they can be prevented for the time being. We cannot afford another pandemic in higher rate increases,” he added.

Meralco invoked the force majeure provision in its supply contracts for May and June, bringing down generation charges, as power demand was low.

A force majeure event is an uncontrollable event that makes it impossible for companies to fulfill their obligations.

In June, the utility billed customers P8.7252/kWh, against the previous month’s P8.7468/kWh. In May, it charged P8.7468/kWh, against April’s P8.9951/kWh rate.

Customers saved P0.2208/kWh last month from the reduced pass-through generation cost of P4.3413/kWh. Since April, total savings from the decreased generation cost hit P1.6 billion.

The July rate is expected to be announced Friday, Mr. Fernandez said.

Meralco is still facing mounting complaints about its computation of bills since the lockdown started. It promised to “double and triple” its efforts in explaining customers’ bills, which are now computed based on their actual consumption.

The power distributor has promised a refund for customers who fully settled their arrears during the quarantine months but who intend to pay them on an installment basis.

Meralco’s controlling stakeholder, 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 a stake in BusinessWorld through the Philippine Star Group, which it controls. — Adam J. Ang