REGULATION | Cesar Tordesillas, Philippines

Meralco wants lower generation charge

Meralco petitioned the Energy Regulatory Commission to lower by US$0.0098 the increase in the generation charge for March 2010. The company wanted the increase to be lowered at US$0.0304 per kwh from US$0.0402 per kwh.

The company clarified that the hike in the generation charge is not a Meralco increase. The generation charge is a mechanism to reflect the cost of power from Meralco's various suppliers and since it is a pass-through charge, Meralco does not earn from the generation charge.

In its petition, Meralco said that for the supply month of February 2010, it incurred a total generation cost in the amount of US$349 million, which would translate into a generation charge of US$0.1485/kWh to its customers for the March 2010 billing.

"This sharp and sudden increase in generation cost is mostly accounted for by the high prices in the Wholesale Electricity Spot Market, brought about by the shortage in electricity supply, as there were several plants which were either out due to preventive or emergency maintenance, or with de-rated capacity because of the 'El Nino' phenomenon. This was aggravated by the increase in demand due to the start of the summer season," Meralco said.

To mitigate the effects of the abrupt increase in generation cost, Meralco proposes that instead of reflecting the actual generation charge of US$0.1485/kWh in its March 2010 billing to its customers, it instead be allowed to implement a lower generation charge of US$ 0.1387kWh for its March 2010 billing. Meralco also proposed that the balance of the generation costs amounting to US$22.97 million be spread over a six-month period starting April 2010, representing a collection of around US$0.0015/kWh.

"Considering the pressing nature of the instant Petition to shield the Petitioner's end-users from such abrupt increase in generation costs and to avoid any consequential financial prejudice to both Petitioner and the consumers, it is therefore urgent that a provisional authority be immediately issued upon filing and pending hearing of the instant Petition," Meralco said.

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