The Energy Regulatory Commission (ERC) is renewing its call on distribution utilities (DUs) to remain diligent in validating costs being imposed by generation companies (gencos) before passing them on to consumers.
The ERC said that all DUs are mandated to exercise prudence in passing on fuel costs to shield consumers from bearing “undue financial burdens” and ensure charges are reasonable, uninflated, fairly computed and consistent with their obligation to supply electricity in the least cost manner.
The regulatory body urged the Manila Electric Co. (Meralco) in a letter dated February 12, to complete the validation to justify the rate adjustment that it will be imposing this month.
Earlier this month, Meralco announced a P0.5738 per kilowatt hour (kWh) increase in its overall power rates that is equivalent to an upward adjustment of around P115 in the total bill of residential customers consuming 200 kWh monthly.
This month’s overall rate increase is mainly driven by the generation charge which went up by P0.4552 to P7.1020 per kWh, primarily due to higher cost of power from independent power producers and power supply agreements.
ERC added that while Meralco admits that a validation of the impact of the use of liquefied natural gas and the new gas supply contracts is necessary in light of the terms of its power purchase agreements (PPAs), the company has yet to provide the results of such validation.
“On the basis of the foregoing, we are constrained from giving any clearance for the recovery of such costs if Meralco itself has not completed its validation or provided the results of such validation to the Commission. Pending Meralco’s validation of the basis of such charges, passing on of such costs to the consumers may be premature,” said Monalisa Dimalanta, ERC chairperson, in a statement yesterday.
Dimalanta added any costs passed on to consumers must be in accordance with Meralco’s PPAs as approved by the ERC.
“In recent decisions issued by the ERC involving pass-through generation charges, the ERC reminds all distribution utilities that their duty does not end when electric power is supplied and the charges have been collected,” Dimalanta said.
