The Energy Regulatory Commission (ERC) should ensure least cost to consumers as the public braces for higher electricity rates due to the termination of San Miguel Global Power Holdings Corp.’s (SMC Global) power supply agreement (PSA) with Manila Electric Co. (Meralco), according to think- tank Infrawatch PH.
This developed as Meralco said power rates in Metro Manila will go up for the second consecutive month this December mainly due to the completion of a distribution-related refund equivalent to P0.4669 per kilowatt hour (kWh) for residential customers.
“More expensive power in the new year is the direct consequence of the ERC’s rejection of the joint SMC Global-Meralco petition to temporarily raise power rates by at least P0.30.
The commission, together with the energy department, should exhibit sectoral leadership and compel power generators to make competing price proposals no higher than the price proposal in the joint petition,” said Terry Ridon, Infrawatch PH convenor, in a statement.
Ridon said the public will not accept prices that are higher than the price proposal in the rejected petition.
“If the ERC entertains price proposals significantly higher than the price proposal in the rejected joint petition, it will have failed to ensure the least cost to consumers, which is one of the most fundamental principles in energy regulation,” Ridon added.
InfraWatch PH expressed concern the PSA termination has now resulted in Meralco procuring additional supply from the Wholesale Electricity Spot Market (WESM), which translates to prices that are at least 75 percent more expensive than the price in the terminated PSA.
Ridon said regulatory rules allow PSA amendments due to extraordinary circumstances which the ERC could have used during the joint petition deliberations to stop rates from spiking.
In a separate statement, Meralco said the P0.3297 per kWh upward rate adjustment in December brings overall power rates to P10.2769 from last month’s P9.9472 per kWh. It is equivalent to an increase of around P66 in the total bill of residential customers consuming 200 kWh monthly.
Meralco said three ongoing refunds totaling P1.3340 per kWh for residential customers continue to temper customers’ monthly bills but these will be completed by December 2022, January 2023 and May 2023 with their impact to be felt in the succeeding billing periods.
Meralco said the increase in power rates were tempered by lower generation charge which went down by P0.1942 to P6.7975 from P6.9917 per kWh the previous month.
However, transmission charge for residential customers increased by P0.0753 per kWh due to higher ancillary service charges of the National Grid Corporation of the Philippines while taxes and other charges registered a net decrease of P0.0183 per kWh due to the absence of feed-in tariff allowance until the February next year.
The company reiterated that it only earns from distribution, supply and metering charges, which went down by P0.0360 per kWh in August for a typical residential customer, after being unchanged since July 2015.
The company also said that the total power requirements for the month were accounted to 7 percent from WESM, 41 percent from IPPs and 52 percent from PSAs.
Apart from the rate hike, Meralco also expects to achieve almost 6 percent growth in its energy sales for the entire 2022 compared to last year.
Ferdinand Geluz, Meralco first vice president and chief commercial officer for customer retail services, said this year’s sales growth volume is also likely to be 4 percent higher than 2019, before the pandemic hit the country.
Geluz said among the drivers of the growth include strong commercial segment rebound, relaxed Covid protocol and restrictions as well as modest growth in industrial sector driven by industries such as plastics, food and beverages. -J. Macapagal
