Meralco decides not to pass on P0.38/kWh NPC GRAM
Tuesday, September 26, 2006
As an upshot of the Supreme Court ruling, giant utility firm Manila Electric Company (Meralco) will not pass on the R.38 per kilowatt hour (kWh) adjustment that would account for generation rate adjustment mechanism (GRAM) charges of the National Power Corporation (NPC) starting in this month’s billing cycle.
It was gathered that Meralco already sent official correspondence to NPC president Cyril del Callar on this concern.
The utility firm opined that since the court ruling prevented it from collecting GRAM charges, and subsequently underpinned by a resolution of the Energy Regulatory Commission, it is compelled to suspend collection of these cost recoveries.
Meralco vice president and utility economics division head Ivanna G. dela Peña confirmed that they are not including recovery of the NPC GRAM adjustments in the August-September billing cycle because of the tribunal’s ruling.
She cannot exactly say when these deferred cost adjustments would finally be recouped, but she noted that they are waiting on the next policy issuance or pronouncement of the ERC on this regulatory matter.
The ERC recently approved P0.0110 per kWh additional recovery for NPC’s GRAM and P0.3687/kWh for its incremental currency exchange rate adjustment (ICERA), with implementation due in the last billing cycle and recovery will be stretched over seven months.
The deferred costs to be passed on under NPC’s 6th GRAM covered the periods from April to October 2005; while the last recovery was the months prior to September 2005.
The ERC indicated that the deferred accounting adjustment (DAA) for the 5th and 6th GRAMs and also the 4th and 5th ICERA recoveries overlapped on different recovery periods.
GRAM is treated as a pass-on revenue-neutral charge allowed by the regulatory body for the stateowned power firm to recover its deferred costs for generation and currency exchange movements.
The costs include fuel and power purchases from independent power producers. ICERA, on the other hand, represents the recoveries that must be made by the NPC from customers for money it advanced to defray the cost of foreign currency exchanges adjustments resulting from fluctuations in the exchange rate.
The Supreme Court has voided the GRAM adjustments of Meralco for June to August 2004; and parallel to thatruling was a policy pronouncement that publication of any rate adjustment or cost escalation processes shall be upheld.
To avoid any threat of legal skirmish, the regulatory body has instructed Meralco to suspend automatic recovery of any adjustments in its generation charges.
posted by philpower @ 3:21 PM,
