SC ruling to hike Meralco rates by over P4/kWh

Published July 7, 2022, 3:14 PM

by Myrna M. Velasco

SC ruling to hike Meralco rates by over P4/kWh


The recent ruling of the Supreme Court upholding the pass-on of suspended charges during the 2013 shutdown of the Malampaya gas production facility, that aggravated simultaneous shutdowns of power plants, will trigger a rate hike of at least P4.15 per kilowatt hour (kWh) in electric bills once allowed by the Energy Regulatory Commission.

In a verdict released this week, the SC upheld the decision of Meralco to collect P22.64 billion worth of recovery costs accruing during November-December 2013 billing cycles, the so-called “perfect storm” in the power industry that had been marred by the scheduled shutdown of the country’s commercial gas field and compounded by the simultaneous forced outages of power plants, hence, driving up electricity spot market settlement prices to sky-high levels.

The high court has delegated to the ERC the authority to set the terms on how the deferred charges will eventually be passed on in the electric bills of Meralco customers.

For the December 2013 billing, the scale of cost recoveries logged by Meralco then was at P9.7 billion while P12.94 billion had been posted for November 2013 billing cycle.

According to the utility firm, it cannot give definitive statement yet if that will be passed on eventually as rate hike in the bill of consumers, with their executives emphasizing that they will have to wait for directive yet from the ERC.

Meralco Vice President Lawrence S. Fernandez explained that “first, ERC will determine what incremental costs, if any are to be recovered. Then ERC will determine how these may be collected.”

The pass-on of the calculated cost recoveries within November-December 2013 was first stopped in February 2014 – and that was on the strength of a temporary restraining order (TRO) issued by the high court.

In line with the politically-charged debates and probes then on whether or not collection of the charges had been warranted, the power companies that have experienced simultaneous outages on their generating facilities were also investigated for collusive acts – because that condition in the power system triggered spikes of up to P64 per kilowatt hour (kWh) in offers at the Wholesale Electricity Spot Market.

The investigation of the ERC on the power plant shutdowns and the alleged collusion of the generation companies (GenCos) had not been concluded until now.

If the cost recoveries will be added in the pass-on rate of Meralco in the succeeding billing cycles, the collections will be paid back to the power generation companies (GenCos) – including those that are still investigated for collusion raps by the regulatory body.