Electricity rates surge as Meralco cites summer heat

Published by rudy Date posted on April 8, 2009

Cebu distributors seek similar increase
THE Philippines’ largest electricity distributor jacked up its rates in its franchise, blaming the increase on rising temperatures that have driven up power consumption.

“There was marked increase in consumption during the peak hours of 9 a.m. to 9 p.m. in March as consumers coped with the summer heat through more intensive use of air-conditioning and other cooling appliances,” Joe Zaldarriaga, Manila Electric Co. (Meralco) external communications official, said.

Because of the increase in demand, Meralco’s purchases from state-owned National Power Corp. (Napocor) and the Wholesale Electricity Spot Market (WESM) registered marked increases of P0.57 and P0.84 per kilowatt-hours, respectively.

These sources supplied 47 percent of Meralco’s power requirements in March and were responsible for the P0.55 per kilowatt-hour increase in its customers’ generation charge, from P4.48 per kilowatt-hour to P5.02 per kilowatt-hour in April.

The average rate of Meralco’s contracted independent power producers (IPP), which supplies the rest of the utility’s requirements, hardly moved during the two-month period, the distributor said.

Generation charges reflected in the country’s largest distribution utility’s bills are pass-though costs from the company’s power suppliers and as such are revenue neutral to the utility.

Higher cost of generation during summer is expected as more expensive plants are used to meet the surge in demand during peak hours.

Last year, Meralco customers also had to endure a P0.52 per kilowatt-hour increase in the generation charge, which moved up from P4.39 per kilowatt-hour in March that year to P4.91 per kilowatt-hour in April

However, this year’s seasonal price increase was coupled with an increase in Napocor’s rates in Luzon of P0.47 per kilowatt-hour.

In light of the increase in rates, Zaldarriaga said that Meralco customers, especially households, should exercise simple but often neglected energy saving tips that offer a big help in lowering electricity use.

“Very simple tips such as using compact fluorescent lights instead of incandescent bulb, doing your ironing at one time and opening refrigerators only when needed will, in one way or the other, help a household save electricity. Consumers actually have the power to control their usage,” he said.

Meralco also said that appliances will operate more efficiently and use less energy when it is in good working order.

In Cebu, electricity distributors have asked the Energy Regulatory Commission (ERC) for an increase in the island’s generation rates.

In a joint filing, Visayan Electric Co. (VECO) and Toledo Power Corp. called for an additional P0.85 per kilowatt-hour increase in generation charges to help them latter cope with high costs.

The country’s second-biggest distributor, VECO, which is owned by the Aboitiz and Garcia families, distributes electricity to more than 275,000 customers in the cities of Cebu, Mandaue, Talisay and Naga and the municipalities of Conso-lacion, Liloan, Talisay, Minglanilla, and San Fernando in Metro Cebu.

Toledo Power, on the other hand, is an independent power producer that runs the Sangi coal-fired power plant in Daanglungsod, Toledo City. It is owned by Global Business Power Corp., a unit of the Metrobank Group.

The companies have an existing power supply agreement with rates capped by state-owned Napocor’s time-of-use (TOU) scheme.

Toledo Power has blamed its financial straits on the delay in the increase in Napocor’s rates as well as higher prices of coal—both locally sourced and imported, adding the state-owned generating company failed to reflect fuel and foreign exchange costs in its pass-through charges.

The Metrobank power unit said it suffered losses in the past three years despite efforts to improve plant efficiency, including the implementation of a massive retrenchment program and a power plant rehab program amounting to P200 million.

To help alleviate Toledo Power’s financial condition and secure Cebu’s power supply, which is already in a critical state because of growing demand and transmission constraints, VECO agreed to renegotiate its supply contract with the Metrobank unit.

This has led to both firm’s petition for a higher rate.

“As a temporary relief while the parties are negotiating for an independent tariff, Toledo Power will charge and collect from VECO an interim rate of Napocor-TOU plus P0.85 per kilowatt-hour,” the companies said in their application.  –Euan Paulo C. Añonuevo, Reporter, Manila Times

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