The Energy Regulatory Commission (ERC) on Tuesday renewed the call for the distribution utilities (DUs) to be diligent in validating costs imposed by the generation companies (GenCos) before passing them on to consumers.
The ERC said the DUs are mandated to exercise prudence in passing on fuel costs to shield consumers from “undue financial burden” and ensure the charges are reasonable, not inflated, fairly computed and consistent with the obligation to supply electricity in the least cost manner.
Along this vein, the regulator urged the Manila Electric Co. in a letter dated 12 February to complete the validation and justify the rate adjustment that it will be imposing this month.
Earlier, Meralco announced a P0.5738 per kilowatt hour (kWh) increase in power rates equivalent to an adjustment of P115 in the total bill of residential customers consuming 200 kWh a month.
Meralco said the rate increase was driven by the generation charge that went up by P0.4552 to P7.1020 per kWh due to the high cost of power from independent power producers and power supply agreements.
The ERC said while Meralco admits that a validation of the impact of the use of liquefied natural gas and the new gas supply contracts is necessary in light of the terms of its power purchase agreements, Meralco has yet to provide the results of the validation.
“On the basis of the foregoing, we are constrained from giving any clearance for the recovery of such costs if Meralco itself has not completed its validation or provided the results of such validation to the Commission. Pending Meralco’s validation of the basis of such charges, passing on of such costs to the consumers may be premature,” said Monalisa Dimalanta, ERC chairperson.
Dimalanta said any cost passed on to consumers must be in accordance with Meralco’s PPAs as approved by the ERC.
“In recent decisions issued by the ERC involving pass-through generation charges, the ERC reminds all distribution utilities that their duty does not end when electric power is supplied and the charges have been collected,” Dimalanta explained.
