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On Meralco website, Napocor offers ‘least-cost’ electricity

Philippine Daily Inquirer
First Posted 00:22:00 05/15/2008

Filed Under: Electricity Production & Distribution, Consumer Issues

In her speech before the Federation of Philippine Industries, President Gloria Macapagal-Arroyo directed National Power Corp. (Napocor) to charge Manila Electric Co. (Meralco) only P4.11 per kilowatt-hour in light of the widely reported P0.52/kWh increase in Meralco?s generation charge?from P4.3885/kWh in March 2008 to P4.9043/kWh in April 2008. (?Arroyo takes on Meralco,? Philippine Daily Inquirer, 5/3/08)

Media reports quoted Meralco as saying that the increase was due to the high cost of electricity coming from Napocor and the Wholesale Electricity Spot Market (WESM). The reports also quoted Napocor and WESM explaining that their rates vary every hour of the day; that at certain hours, called non-peak hours, the rates are low; and that if Meralco wants lower rates from Napocor and WESM, all it has to do is buy electricity during the non-peak hours. Meralco countered that the generation charge is a pass-on charge and the utility is not earning from this charge because it is just a distribution company. To further appease the growing restiveness of the public, Meralco explained that it has been transparent and urged the public to visit their website which shows the rates coming from their different sources of electricity.

In preparation for the Consultative Meeting, organized by the Energy Regulatory Commission (ERC) upon the request of EMPOWER, of which the National Association of Electric Consumers for Reforms (NASECORE) is part of, I visited the Meralco website and printed the page showing its generation charge (according to each source) for April 2008. Surprisingly and contrary to the claims of Meralco, the Napocor rate appearing on the website was only P4.01/kWh as against the P4.90/kWh generation charge that Meralco billed its customers. Under Sec. 4 of Republic Act 9209 (Meralco franchise) and Sec. 23 of the Electric Power Industry Reform Act, Meralco is obliged to supply its captive customers with electricity in the least-cost manner.

It would not take a college graduate to understand that the least cost supply of electricity in this instance was the Napocor rate of P4.01/kWh, and this should have been the rate billed to the 4.4 million Meralco customers, not the P4.90/kWh which was P0.89/kWh higher.

In light of this, we believe we were misled if not deceived by Meralco when it announced that the reason for the P0.52/kWh increase in its generation charge in April 2008 was the high rates of Napocor and WESM. We also believe that we should have been charged only the Napocor rate of P4.01/kWh which is the least cost and that the P0.89/kWh excess charge should be refunded to the Meralco customers. We hope the ERC will share the position of NASECORE and use its ?motu proprio? powers to direct Meralco to refund the over-billing and impose the corresponding penalty. Should ERC advise us that a petition is necessary, we will gladly file one.

PETE L. ILAGAN, president, National Association of Electricity Consumers for Reforms, Inc. (NASECORE), Tambo, Parañaque City

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