Group says ERC denial of SMC-Meralco power rate hike didn’t serve public interest

The National Association of Electricity Consumers for Reforms Inc. (NASECORE) slammed the Energy Regulatory Commission’s rejection of the joint power rate hike petition of the Manila Electric Company (Meralco) and San Miguel’s power units.

In a letter addressed to President Ferdinand Marcos Jr., NASECORE president Pete Ilagan said ERC’s denial of Meralco and its suppliers South Premier Power Corporation (SPPC) and San Miguel Energy Corporation's (SMEC) petition for rate increases “does not actually afford adequate relief to the electric consumers.”

The ERC denied SPPC and SMEC's joint motions to hike the generation charge last month.

Meralco and San Miguel earlier cited the higher prices of coal and natural gas materials used to produce electricity.

The ERC, however, said that SPPC and SMEC could supply Meralco’s demand from other sources which are “possibly cheaper sources.”

The companies sought the ERC’s thumbs-up for a provisional generation rate of P4.045 per kilowatt-hour (kWh) to P5.41/kWh without “any escalation clause” which could have increased rates by about 32%.

Ilagan said that while the denial was “well and good,” “this does not explain why Meralco’s average or blended rate continues to rise astronomically, reaching P6.9393/kWh in September 2022.”

“The reason is SPCC and SMEC are only two of the 12 Meralco suppliers, with the rest continuing to charge sky-high rates without any kind of restraint,” he said.

“It so happens that these other suppliers have ‘pass-thru’ provisions in their PSAs [power supply agreements] which allow for automatic price adjustment/escalation,” he added.

GMA News Online has sought the ERC’s comment on the matter.

Sought for comment, Meralco said it “has always been transparent in its generation charge computation, which is posted on its website and was even used as reference by Mr. Ilagan.”

“The computation clearly shows the underlying suppliers' costs that go into the generation charge... Meralco reiterates that its overall rates have gone down this month, which was in part due to the slight reduction in the generation charge from its suppliers. A comparison of rates will show that its rates this month are even lower compared to that of a decade ago or in October 2012,” it said.

The power distributor said it has always taken into consideration the least cost for consumers before entering into contracts with generation companies.

Ilagan said that the ERC denied the slightest increase in generation charges by Meralco, SPPC, and SMEC “but tolerated the higher generation rate of other Meralco suppliers and the runway generation charges of most electric cooperatives.”

He said that the regulator’s decision was “very opposite” to the “least cost principle” under the Electric Power Industry Reform Act and “does not serve the public interest.”

“In behalf of the 20 million electricity consumers subject of NASECORE's advocacy, we respectfully ask you to urge the ERC to review this anomalous situation as soon as possible,” Ilagan said. — BM, GMA News