MANILA, APRIL 24, 2007 (STAR) By Donnabelle Gatdula - The Manila Electric Co. (Meralco) said yesterday it might spend about P1 billion for the refund of the adjustment in the generation charge it had "mistakenly" collected from its customers in November and December 2006.

Meralco head of utility economics Ivanna dela Peña, however, said they have a pending motion for reconsideration before the Energy Regulatory Commission (ERC) on the refund.

She explained that the company is asking for a reconsideration on the 28-centavo adjustment in the generation charge it had imposed on its customers in November and December 2006 because during that period their under-recoveries have reached P5.6 billion.

Even with a generation charge of P4.7096 per kWh, Meralco will still be under recovering P5.6 billion of what it had already paid its suppliers in those two months.

According to Dela Peña, the motion for reconsideration stemmed from an ERC order dated Feb. 1, 2007 but released Feb. 20, which stated that Meralco should not have updated the generation charge in November 2006 to P4.7096 per kWh following a provisional approval of a generation charge at that level.

Rather, the generation charge should have remained at P4.4290 per kWh in the November 2006 billing.

Dela Peña said they had implemented the P4.7096 per kWh rate for December due to the absence of an order from the ERC saying that Meralco should not adjust their rates yet, even though the commission already issued a provisional approval.

"For the billing month of December, in the absence of a subsequent order from ERC, Meralco maintained the generation charge at P4.7096 per kWh, when according to ERC’s Feb. 1 order, it should have been brought down to P4.4290 per kWh," she said.

"The monthly filing for adjustments in generation and system loss charges following the Sept. 1 order of the ERC had increased the lag of cost recovery from one month under the Automatic Generation Rate Adjustment Mechanism (AGRA) to as much as five months at present," Dela Peña added. "Further, with ERC pegging the generation charge at P4.4290 per kWh, reflective of July 2006 costs, there is now an apparent disconnect between the cost of supply and the generation charge being billed to customers."

Following a clarification made by the ERC, Meralco billed its customers a generation charge of only P4.4290 per kWh in March and April 2007, notwithstanding the fact that the cost of supply for October and November 2006 being recovered was beyond P5 per kWh.

"While the ERC allowed the collection of a differential amount of 26.14 centavos per kWh applied to customers’ consumption for November and December 2006, the recovery was pegged at P4.6904 per kWh, way below the cost of supply," she said.

Meralco assured its customers that what was perceived as a rate increase for April 2007 was merely the collection of differential amounts for generation and system loss charges for November and December 2006 under "Other Charges."

Due to system enhancements that had to be done to accommodate the differential charges, there was a "delay" in the collection of the November 2006 differential amount. This, however, should normalize in the coming months.

Dela Peña said, "These rate adjustments do not accrue to Meralco, as the generation charge is merely a pass-through charge. However, due to the delayed recovery and the pegging of the generation charge to a certain level, the collection of these pass-through charges had not been revenue-neutral, but is in fact causing financial strain on the part of Meralco."

NG misses budget deficit target By Des Ferriols The Philippine Star 04/24/2007

The National Government (NG) incurred a P52-billion budget deficit in the first quarter, missing its P45.8-billion target because of poor revenue collection, Finance Secretary Margarito Teves said yesterday.

"We’ve had a challenging first quarter, but we have seen improvements in March," Teves told reporters.

"Tax revenues will begin to see improvement before the end of the first semester as we implement intensified tax collection measures," he said.

Malacañang, however, remained optimistic the government will still be able to meet its deficit target of P63 billion for this year.

Press Secretary Ignacio Bunye said the economic managers of the Arroyo administration will come out immediately with a full assessment of the country’s fiscal position. "Based on our own experience last year, we also did not meet some quarterly targets but on a year-on-year basis, we were able to achieve our target," Bunye said.

The government set the P45.8-billion budget ceiling for the quarter. For the whole of 2007, it expects the deficit to stay below P63 billion — half of last year’s P125-billion target.

The government had expected to increase spending in public works in the first quarter to spur economic growth.

Spending totaled P289 billion, still below the P301.6 billion cap. Revenue reached P237.3 billion, short of the P255.8 billion goal.

Analysts said the budget deficit data were a cause for concern. "We remain concerned that such weak revenue performance will lead to some fiscal slippage, raising the budget deficit for 2007 above the projected P63 billion," they said.

Teves said the government missed its deficit target by 22.6 percent even after generating savings from low interest rates and despite missing its spending target by P12.4 billion.

He said the deficit was larger than expected because revenue collections were significantly lower than the target, resulting mainly from lower customs collections and an across-the-board decline in tax revenues.

According to the Development Budget Coordinating Committee (DBCC), total revenues are projected to reach P973.328 billion, 12.9 percent lower than the P1.119-trillion target under the 2007 budget.

For the quarter alone, Teves reported that the Bureau of Internal Revenue (BIR), in particular, was P12.1 billion short of its P143.1 billion collection target because of declines in excise tax collection, income tax collection and value-added tax collection.

The Bureau of Customs (BOC), usually the consistent over-performer among revenue-generating agencies, missed its P46.9-billion target by P6.7 billion mainly due to the appreciation of the peso against the dollar which brought down the value of imports and the corresponding import duties.

In March alone, Teves said the budget deficit was recorded at P33.4 billion, about 23 percent higher than the P27.2 billion shortfall recorded during the same month in 2006.

Budget Secretary Rolando Andaya Jr said the March outcome was due to robust spending as line agencies took advantage of the good weather and rolled out a significant number of infrastructure projects ahead of the rainy season and the ban on public spending prior to the May elections.

For the whole quarter, Andaya said total spending was P13.7 billion lower than the P301.6 billion quarterly program with debt service expenses P5.1 billion less than expected and operations expenses falling P6 billion short of the programmed amount.

Although there was an increase in March spending, Andaya said the DBM has been implementing its so-called "no performance, no release" policy where line agencies only get their quarterly allocations if they are able to spend their previous allocations.

"If they can not absorb their allocation and move their projects, we do not release their succeeding budget allocations," Andaya said. "There is no point in releasing funds that line agencies are not capable of spending."

Despite missing its first quarter targets on all fronts, Teves said the government had no intention of adjusting any of its targets, especially the deficit target for the whole year which was pegged at P63 billion.

Teves said the government would have to take up measures to offset the impact of the slowdown in revenue collections, particularly the sale of its remaining assets such as government’s shares in San Miguel Corp. (SMC) and Manila Electric Co. (Meralco). — With AP

Chief News Editor: Sol Jose Vanzi

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