Meralco rate may go down in next 3 years

MANILA, Philippines – After charging customers higher rate in its January billing cycle, the distribution rates of Manila Electric Company (Meralco) are expected to go down in the next three years – P1.4920 per kilowatt hour (kWh) by 2012 or P0.1544 per kWh lower than its current charge of P1.6464 per kWh; P1.4730 per kWh by 2013; and P1.4170 per kWh by 2014.

However, by 2015 the rate will climb slightly to P1.4490 per kWh.

The successive reductions in Meralco rates from 2012-2014 is indicated in the draft determination that has been anchored on the performance-based regulatory (PBR) scheme issuance of the Energy Regulatory Commission (ERC). The company is already entering its third regulatory reset in the so-called alternative tariff setting regime in the deregulated power industry.

The regulatory body will deliberate further on the proposed new rates of the distribution firm, hinging partly on the comments and inputs it would be able to solicit from industry stakeholders. The final draft of the Meralco PBR rates will then be the basis of the charges to be billed to consumers.



Though that draft determinations primarily set the tone on whether the rates of regulated utilities will be going up or down in their next regulatory resets.

The estimated rates for Meralco, which would eventually be translated and broken down into distribution, metering and supply charges, have been based on weighted average cost capital (WACC) of 15.01-percent.

Based on the draft determination, the calculated annual revenue requirement (ARR) of Meralco for 2012 would be at P44.350 billion, factoring in the specified Guaranteed Service Level (GSL) allowance, which is a component of the performance incentive scheme (PIS) under PBR.

By 2013, the estimated revenue requirement for the utility firm is placed at P45.364 billion; and by 2014, it will be slightly lower at P45.211 billion; while 2015 sees a rise in the company’s revenue requirement to P47.886 billion.

It must be gleaned from the ERC’s initial ruling that the rate reductions were somewhat reversal of the increases that Meralco had applied for in the next four regulatory years.

For 2012, Meralco has in fact batted for an increase on its rates to P1.7056 per kWh; and with further adjustment to P1.7686 per kWh by 2013. For the regulatory years 2014 and 2015, the utility firm also sought higher rates of P1.8349 per kWh and P1.9036 per kWh, respectively.

The ERC noted that the calculated ARR for Meralco had been based on submitted forecast energy consumption on the Meralco network “on a normalized basis”; using the 2012 values as reference.

“It is clear that the Meralco application for its revenue requirement over the third regulatory period foresees better efficiencies, but ERC saw more opportunities for still better efficiencies,” the regulator has noted.
source: mb.com.ph/