The Energy Regulatory Commission (ERC) on Thursday announced authorizing the Manila Electric Co. (Meralco) to collect on behalf of power generation companies or gencos so-called pass-on costs that have been denied the industry for some time, compelling some of the more heavily affected companies to seek prompt redress of their grievances.
The decision impacts on power supply agreements Meralco has contracted beginning the October billing period this year and results in electricity charges rising as high as P0.33 per kilowatt-hour more each month over the next 12 months, based on calculations made by the ERC itself.
Under a resolution dated 13 August this year made public on Thursday, the ERC allows Meralco to reflect in the energy invoices of industrial, commercial and household customers so-called pass on costs that until now had been denied the various gencos that Meralco, as power distributor, contracted in the past.
Meralco purchases power from gencos using indigenous gas, liquid fuel and imported LNG. Some of the gencos rue the regulatory stricture preventing the industry from recovering costs other than that allowed by the ERC.
The Lopez Group’s First Gen Corp., for instance, recently stood up against the prohibition, arguing that gencos running on imported LNG are allowed cost recovery on the landed cost of the expensive commodity and not much else.
First Gen Corp. affiliates First Gas Power Corp. and FGP Corp. have since endeavored to recover the difference between previously approved pass-through costs and the landed cost of LNG under the new gas sale purchase agreement (GSPA).
Monalisa Dimalanta, ERC chairman, said the Meralco authority impacts on the standing charge and unit rate of P0.32 to P0.33 per kilowatt hour for 12 months.
She explained the charge is not fixed as this depends on the fuel mix the gencos use in generating electricity.
Earlier, First Gen said the regulator took time in making up its mind in allowing gencos to recover costs beyond the landed cost it allowed the industry, risking investor appetite with the negative signal the indecision has generated.
First Gen was limited to collecting only the landed cost of LNG but not other costs as storage and processing costs.
The prohibition, First Gen said, has proven financially distressing.
