Consumers will face higher electricity rates for March, by about P0.62 per kilowatt-hour, even after Manila Electric Co. (Meralco) deferred the collection of P1.1 billion of generation charges to mitigate the impact of the higher rates on them, the power firm revealed Wednesday.
Meralco estimated a total increase of about P1.11 per kWh for residential customers this month, including value-added tax and system loss, prompting it to ask the Energy Regulatory Commission (ERC) to defer the collection of a portion of the increase equivalent to P0.40 per kWh.
Given the significant increase in generation charge, Meralco spokesman Joe Zaldarriaga said the company coordinated with its suppliers and the ERC for the deferral of a portion of the generation costs for the February supply month.
“This will help us bring down the generation charge increase in the March billing period, to the benefit of our customers,” he said.
“The total deferred generation costs of P1.1 billion, equivalent to P0.40 per kWh, will be collected on a staggered basis in the April and May billing periods as cleared by the regulator,” the Meralco executive said.
Meralco, the country’s biggest power distributor with more than seven million customers in its franchise area, is set to make a final rate adjustment for March on Friday.
The company informed the ERC of its plan to defer collection of the generation charges over a two-month period to cushion the impact of increases in generation charges for February.
“We have no objections to initiatives of DUs (distribution utilities) to mitigate the impact of rate increases on consumers. From our end, we will proceed with our validation of the costs passed on,” ERC chairperson Monalisa Dimalanta said.
This developed as a congressional leader urged President Ferdinand Marcos Jr. to relaunch a better version of his father’s 1970s “enercon” (energy conservation) campaign given the government’s P91-billion annual utilities and fuel bill.
“The program must be comprehensive. A national framework of which a four-day work-week, as proposed by the Finance secretary, is but one component,” House Deputy Speaker Ralph Recto said.
Recto made the statement as the country is reeling from the surging inflation.
It also comes a day after Finance Secretary Benjamin Diokno revealed government agencies may soon adjust their office hours to 7 a.m. to 4 p.m. from Mondays to Thursdays with work-from-home setups on Fridays.
Diokno said in a Palace press conference that the Department of Energy (DOE) plans to implement daylight saving time first among other government agencies to save electricity and promote energy efficiency.
This will be part of the government’s short-term interventions to mitigate high inflation in the country, Diokno said.
Meralco head of utility economics Lawrence Fernandez said the company projected a P0.92 per kWh generation charge increase for March.
“Meralco, with the cooperation of gencos (power generation companies), will defer the equivalent of P0.40 per kWh to April and May. Thus, the gen charge increase for March will be reduced to P0.52 per kWh. If we included taxes and other charges, the total increase for a residential customer will be around P0.62 per kWh in March,” Fernandez said.
ERC discussed Meralco’s proposal during a special meeting on Tuesday after the latter computed a significant increase in power rates, reaching P0.92 per kWh plus other adjustments for VAT and system loss for a total of P1.11 per kWh for residential customers.
The commission said it shall subject the Meralco increase to further validation “as to compliance with the underlying power supply agreements and substantiation of any fuel pass-through component, as applicable.”
Meralco’s generation charges went up amid higher rates at the electricity spot market and higher charges from some of its suppliers.
In its letter to the ERC, Meralco said it coordinated with several of its power suppliers to request the deferral of charges from their billings for February to cushion the impact of the increase in generation rate to its customers.
“Economics and environment” should be the driving force behind the enercon campaign, Recto said.
“For the people to support it, it should be framed as saving money and saving the Earth at the same time,” he said.
In 2019, before the pandemic “turned the lights off” in public buildings, government agencies – national, local governments and government-owned and controlled corporations or GOCCs – paid P43.2 billion for power, water, and gas, Recto said.
On top of this is the P47.5 billion in “fuel, oil and lubricant” expenses it racked up that year.
“That’s about P90.7 billion in a year. We will be able to save 10 percent; with P9 billion savings we will be able to use the money to buy medicines for hospitals,” Recto said.
But Recto said the parameters of the enercon campaign should be properly defined by a Palace order, so it does not harm essential services.
President Marcos should launch it now to familiarize government offices before summer sets in, when a rise in air-conditioner use, low water levels in hydroelectric dams, and distribution lines trip-offs caused by high heat index combine to trigger power outages, the lawmaker said.
“But the main price driver is that coal, which accounts for 58 percent of generating capacity, is getting expensive, and this cascades down to higher meter charges,” Recto said.
When the global oil crunch hit the country in the 1970s, President Marcos Sr. launched an “enercon campaign” from the demand side, while building plants on the supply side, under a world-class energy team.
When world oil prices soared during her watch, then-President Gloria Macapagal Arroyo responded with Administrative Order 103 which ordered government offices to reduce by 10 percent their cost of the consumption of fuel, electricity and other utilities.
It was followed by AO 110, which institutionalized a Government Energy Management Program.
“The records and aide memoires on these previous enercon campaigns are in the presidential library for President BBM to read,” Recto said.
