EXPENSIVE DECISION FOR CONSUMERS

The looming increase in the generation charge that consumers in Meralco’s franchise area will feel in their January billing could have been minimized with a more holistic approach when the Energy Regulatory Commission denied San Miguel’s petition for relief to cover huge losses incurred due to skyrocketing fuel prices consequent to the economic shock waves from the ongoing war in Ukraine. ERC’s decision though consistent to its mandate to protect consumers is now turning out to be more expensive for millions of consumers.

San Miguel proposed a staggered collection of the P1.57/kWh increase over a period of six months to cushion the impact to Meralco’s customers. After this proposal was rejected by the ERC, San Miguel secured a temporary restraining order that in effect countered the ERC’s rejection and allowed San Miguel unit, SPPC, to cease supplying 670 MW to Meralco which SPPC started implementing on December 7. This situation forced Meralco to source the entire contract capacity from the Wholesale Electricity Spot Market (WESM) starting December 7 which has always been higher and averaged around P9/kWh as of December 11 according to Independent Electricity Market Operator of the Philippines (IEOMOP) which operates the WESM.

In efforts to mitigate the impact of high prices in the WESM, Meralco started negotiations for emergency power supply agreements (EPSA) which led to an agreement between Meralco and GNPower to partially cover the 670 MW supply and lessening Meralco’s exposure to higher WESM prices.

However, even the EPSA’s lower rate of P5.96/kWh compared to the P9/kWh of the WESM, the rate is still higher than the P4.30/kWh rate in Meralco’s original supply deal with SPPC. Had the ERC allowed San Miguel’s proposal for a temporary and staggered collection P1.57/kWh increase this would have been lower than the SPPC deal and far better than the December average rate of P9/kWh in the WESM.

Now that we are seeing the detrimental effects, we hope that the ERC will act fast and remedy this situation which is now proving to be more expensive for electricity users.

Atty. Tim Abejo

Co-convenor

CitizenWatch Philippines