The uptrend in the tariff of Manila Electric Company (Meralco) in its July billing will strain its customers’ household budgets, but a survey of selected power utilities in various parts of the country would show that its rate hike is still leaner versus peer-distribution firms.

Meralco announced last week the P2.1496 increase in its tariff, which had been mainly attributed to the pass-on of deferred cost recoveries – primarily from capacities procured from the Wholesale Electricity Spot Market (WESM) and supply sourcing from private generation companies.

However, Meralco is not alone in that predicament as the other power utilities even enforced heftier rate hikes of P3.00 to more than P7.00 per kilowatt hour.

In particular, data manifested that the rate hike implemented by Davao Light and Power Company had been at P2.96 per kWh; Visayan Electric Company (VECO) in Cebu hovered at P3.56 per kWh; the tariff of MORE Electric and Power Corporation in Iloilo went up by P4.08 per kWh; and San Fernando Electric Light & Power Company (SFELAPCO) implemented substantial increase of P7.24 per kWh.

For Meralco, in particular, its all-inclusive pass on rate for July had gone up to P11.6012 per kWh from P9.4516 per kWh in June – and its deferred cost recoveries had been two-tiered; one from the WESM capacity sourcing and the agreed staggered pass-on of billed generation charges by its private power suppliers.

There was a common thread cited by the power utilities why there was sudden surge in their over-all tariff pass-on in this month’s billing cycle – and that was due to the ‘artificially reduced’ rates in June due to the deferment of cost recoveries ordered by the Energy Regulatory Commission.

On that regulatory imprimatur, they noted that tariff calculations got convoluted, and that resulted in a very complex mismatch – and while consumers were given pseudo-cutback in the June rates, those were also taken back from them a month after.

The folly of cost recovery suspensions had already reared its ugly head when the ERC also mandated deferred cost recoveries roughly 20 years ago with the enforcement of the Generation Rate Adjustment Mechanism (GRAM) and Incremental Currency Exchange Rate Adjustment (ICERA) in the restructured power sector – and those were even pointed to by investors as major ‘regulatory turn off’ because they correspondingly distorted market signals, hence, capital flow for capacity additions in the power sector did not come as they were needed then.

Apart from deferred cost adjustments, some power utilities likewise indicated high exposure in the spot market due to delayed approvals of power supply agreements (PSAs) on their respective competitive selection process (CSP) undertakings – and that served as a very dangerous precept for industry players especially when WESM settlement prices were surging in the summer months.

Nevertheless, other power utilities still managed to have relatively lower rate hikes such as those of Negros Occidental Electric Cooperative (NOCECO) at P1.31 per kWh; Central Negros Electric Cooperative (CENECO) at P0.58 per kWh; Leyte IV Electric Cooperative (LEYECO IV) at P0.34 per kWh; and Northern Samar Electric Cooperative (NORSAMELCO) at P0.38 per kWh.

Consumers of other regional power utilities are even better placed because they would be able to enjoy rate reduction – primarily those served by Pampanga II Electric Cooperative (PELCO II) which will have substantial rate cut of P1.73 per kWh; then First Laguna Electric Cooperative (FLECO) of which tariff will be down by P0.43 per kWh; while PELCO III and Occidental Mindoro Electric Cooperative (OMECO) will have corresponding reduction of P0.03 per kWh.