Meralco increase meant for suppliers
Wednesday, April 11, 2007
By MYRNA M. VELASCO
The bid of Manila Electric Company (Meralco) to adjust its generation charges by cumulative P1.73 per kilowatt hour (kWh) is a pass-through cost to its power suppliers, like the National Power Corporation and independent power producers; meaning the revenue will not directly flow to its coffers.
"We would like to clarify that the adjustment we filed before the Energy Regulatory Commission (ERC) is not a Meralco rate increase but merely to recover adjustments in both the December 2006 and January 2007 generation and system loss charges," Meralco president and chief operating officer Jesus P. Francisco has noted.
The utility firm’s cash flow just gets adversely affected on these cost recoveries because it is mandated to advance these cash payments to power suppliers before recovering them from consumers.
For instance, at the time that the generation charges for its power purchases from the Wholesale Electricity Spot Market (WESM) were surging in December 2006 hitting P10.15 per kWh, the only generation charge Meralco was able to pass on to consumers was P4.69 per kWh; thus, incurring the huge under-recoveries.
Francisco said the cost recoveries they have been batting for December 2006 and January 2007 "merely reflects the cost of electricity purchased for the supply months of November and December 2006.
Meralco merely collects what it is billed by its power suppliers which include NPC, WESM and the IPPs."
"I also would like to assure the public that this is merely just a cost-recovery mechanism and revenueneutral in so far as Meralco is concerned. We never gain a single centavo from changes in the cost of power supply that is passed on to our customers," Francisco said.
He added the increase in the generation charges was mainly due to the high cost of supply from the WESM and to mitigate the impact of the increase, Meralco in its application before the ERC proposed that "WESM bills for the affected months be recomputed at NPC’s TOU rates, similar to the process undertaken by the ERC for the third and fourth month of WESM commercial operations".
Meralco said its underrecovery for both December 2006 and January 2007 amounted to over P5 billion. As of March, however, it was noted that total under-recoveries already swelled to P13.7 billion due to regulatory lag, or the delayed timeframe of recovering costs relating to purchased power.
Meralco further explained that it already paid NPC, WESM and the IPPs for the power supplied in November and December 2006 which the applications seek to recover. Sellers to the electricity spot market are predominantly NPC and the Power Sector Assets and Liabilities Management Corporation.
"Since Meralco now has to make monthly filings for adjustments in its generation and system loss charges, there is now a lag of about five months from the time the cost is incurred and its subsequent recovery from customers," Francisco stressed.
For the month of February 2007, there are indications that Meralco’s generation charge would go back to a lower level at P4.6078 per kWh, as compared to the January application of P6.4221 per kWh; granting that it would be allowed first to collect previous under-recoveries. (MMV)
posted by philpower @ 8:01 AM,
