With high anticipation that electric bills will drastically spike during the summer months, the Energy Regulatory Commission (ERC) sounded off this early that it will prod the private distribution utilities (DUs) and electric cooperatives (ECs) on staggered billing on the resulting radical rate spikes during the summer months.

“We are appealing to the DUs to do it on their own. Because if they don't do it on their own, then again, the regulator will be constrained to step in,” ERC Chairperson Monalisa C. Dimalanta noted.

She apprised media in a press briefing that “for the summer period, we already know that there’s always a semi-bill shock, if not total bill shock, and we need to spread out the collection, so it will be deferred.”

Dimalanta qualified though that “we have yet to simulate (the increase); then we will have to study if we need to take more drastic measures with respect to our distribution utilities.
We're waiting actually for the full billing month numbers so that we can see if we need to put in place more regulatory measures.”

At this stage, the chief regulator said “we don’t want to pre-empt them, because there are DUs that are really taking initiatives, so we let the DUs with initiative to do it.”

Dimalanta indicated that for the deferred pass-on of rate increases to be concretized, the DUs will also need to pursue discussions with their supplier-generation companies (GenCos) so they can agree on proposed staggered cost recovery.

The ERC chief similarly stated that there is no need for the DUs to seek formal approval from the regulatory body on staggering rate hike pass-on, with her emphasizing that “they (DUs and electric cooperatives) can just write us – they don’t need to ask permission.”

Based on data gathered by the ERC, prices in the Wholesale Electricity Spot Market (WESM) soared in the past two weeks of red and yellow alerts pummeling Luzon and Visayas grids.

From settlement prices of P2.00 to P6.00 per kilowatt hour (kWh) in comparative timeframes last March, the tight supply conditions in the two grids triggered swell in spot market prices above P13.00 per kWh.

The highest settlement prices were logged on April 29 at P13.098 per kWh; then P13.438 per kWh on April 18; P13.504 per kWh on April 15; P12.243 per kWh on April 26; P11.711 per kWh on April 23 and P10.405 per kWh on April 22.

Dimalanata, nevertheless, specified that the price hikes may still be ‘diluted’ with the application of the secondary price cap which is at P6.245 per kWh; as well as on factoring in the scale of exposure of the power utilities with the spot market vis-à-vis their contracted capacities.

“The WESM prices do not show the full picture. For example in Luzon, there’s 11% increase, but it doesn’t mean that’s the increase in our consumer bills, because that will depend on the contracts (of the DUs), so we have to look at that first,” she stressed.

On widely perceived belated action of the ERC on the spot market suspension, Dimalanta defended “it's a very delicate balancing act – because we just don’t want to be doing drastic market intervention. What we want is: it (WESM) will always operate the way a market should.”

She emphasized that during the series of red and yellow alert conditions in the Luzon and Visayas grids, “in a way, the mechanisms in the market were working at that time. So, the regulator must not be trigger happy in enforcing intervention, because there are mitigating mechanisms that should be able to address that,” with her primarily referencing on the secondary price cap.