MERALCO  AWAITS  DOE  NOD  ON  WHOLESALE  ELECTRICITY  BILLING

MANILA, SEPTEMBER 1, 2008
(STAR) By Donnabelle L. Gatdula - The Manila Electric Co. (Meralco) is awaiting the Department of Energy’s go-signal on how to bill its customers in relation to the price spikes in the wholesale electricity spot market (WESM) last July.

“We had a meeting with Energy Secretary Angelo Reyes. We have decided that we will wait for the DOE to make its official announcement on how to address this issue,” Meralco president Jesus Francisco said.

Francisco said while waiting for the DOE decision, they would continue to bill their customers based on time-of-use (TOU) rates.

According to the Meralco official, they were supposed to firm up an arrangement with the DOE within the month of August but the DOE has yet to announce its decision on the matter.

It was learned that since the Energy Regulatory Commission (ERC) has no direct jurisdiction on this issue, it let the DOE intervene.

“We understand that the DOE is in consultation with the ERC on what should be done on this concern to be able to protect the interest of the consumers,” Francisco said.

The Philippine Electricity Market Corp. (PEMC), the operator of the WESM, earlier announced the possibility of higher electricity rates in August with the spike in WESM prices in July, hitting P18 per kilowatt-hour (kwh).

If not corrected, this will translate to a P1 per kwh additional charge to the electric bills of Meralco. Meralco, in July, traded about six percent of its power requirement from WESM.

ERC executive director Francis Saturnino Juan said the agency’s power is limited to regulatory policy implementation with regard to this issue. The commission has decided to suspend Sec. 3.5 of the Rules on the Default Wholesale Supply Arrangements for WESM to bring down electricity prices.

With the suspension of such rule, Juan said the net settlement price at WESM of P18 per kwh will not be applied to all the transactions at the market during the particular period.

Juan explained that since intervention in the WESM is not part of ERC’s mandate, they decided to suspend one of the existing rules concerning the WESM trading, thus even if the July settlement price of P18 per kwh is not changed, the rates that would be passed on to consumers will still be within reasonable levels.

Specifically, these rules state that “any distribution utility which has an existing transition supply contract with National Power Corp. but opted to become a direct WESM member shall no longer enjoy the 20 percent bandwidth as stated in its TSC with Napocor. All imbalances beyond the 100 percent contracted level shall be deemed taken from the WESM.”

“It seems that Meralco did not go beyond the bandwidth or allowance stated under that rule. This means that Meralco will still use the TOU of Napocor,” Juan said. Napocor’s TOU stood at P3.89 per kwh.

Under the rules, imbalances are defined as electricity withdrawals made by a customer from the WESM in excess of contracted levels.

Juan said the ERC is mandated to look after the interest of consumers and seek measures to mitigate the high WESM prices.

“We we will communicate this to PEMC so that they can immediately re-calculate their bill,” Juan said.

Late last week, PEMC president Lasse Holopainen urged the ERC to intervene to stop the price spikes in the market.

“ERC can intervene and correct these prices and effect a time-of-use rate,” Holopainen said.

“The prices have resulted from a major transmission problem, San Jose, which effectively cut our market in half. Now, not only has this caused us a lot of problems, in terms of recalculating everything. It is under discussion now with the regulator as to whether there should be an intervention,” he said.

Before the spike in June, WESM prices were extremely low averaging P2.45 per kwh.


Chief News Editor: Sol Jose Vanzi

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