Hearing today on Meralco hike
Business World, 12 January 2004

By Jennee Grace U. Rubrico

Reporter

The Energy Regulatory Commission (ERC) will resume today the public hearings on the petition of Lopez controlled Manila Electric Co. (Meralco) to increase its electricity price by an average of 13.58 centavos per kilowatt-hour.

An ERC official told Business World that one of the issues that would be discussed today's was opposition to Meralco's provisional authority to increase its rate by 12 centavos per kilowatt-hour effective this month.

"There are motions for reconsideration filed by (those opposed to the provisional authority). Those will be taken up during the hearing," the official said.

Last October Meralco, the country's largest power distribution utility, filed before ERC a petition to increase its rate, as it noted that its financial position was "critical." It also asked ERC for authority to provisionally raise prices starting this month pending the approval of its rate adjustment petition.

In an order released late November, ERC authorized Meralco to provisionally increase its rate by 12 centavos per kilowatt-hour, so it could undertake 42 expansion projects that have been delayed for lack of funds.

But ERC also said that if Meralco 's petition was found unjustified, it would have to refund customers for the 12 centavo hike.

Several advocacy, industrial, and civic groups have asked ERC to revoke the provisional authority for being baseless. Freedom from Debt Coalition also asked the Supreme Court to stop the provisional increase by issuing a temporary restraining order.

In a hearing last Dec. 22, the commission ordered groups opposed to the provisional authority to put their arguments in writing. It also ordered Meralco to reply to the arguments.

The ERC official said Meralco may be asked to present today witnesses who would justify its rate hike petition.

On his part, Pete Ilagan, president of consumer group National Association of Electric Consumers for Reforms, said his group was ready to cross-examine Meralco witnesses.

Mr.Ilagan also said ERC, in a pre-hearing conference last week, asked concerned parties to limit themselves to one lawyer each during the hearing.

Meanwhile, firms directly connected to state-run National Power Corp. have also opposed the provisional rate increase that ERC gave to Meralco.

In a pleading filed last Jan. 8, the Napocor Industrial Consumers Association, Inc. asked ERC to revoke the provisional authority, "pending clarification and/or rectification of .concerns."

Among the issues raised by the group was ERC's grant of provisional increase based partly on unaudited financial statements.

"Though part of the basis for revenue requirements was based on the audited financial statements of year 2002, an unaudited portion was added to "normalize" revenues for the year while injecting into the computation of required revenues the effects of the 2003 rate increase. The combination of audited financial statements and unaudited figures, if used as base for computations, makes the base effectively unaudited.The mode of computation used by the Honorable Commission therefore makes the provisional authority based on unaudited financial statements, and which in our experience in the past was never practiced by our energy-regulating boards," it said.

The group also said that ERC should not have relied on Meralco computations.

The group added that Meralco should have sought a rate reduction instead of a rate increase, because of the completion of its renegotiations of its power supply contract with First Gas Power Corp.

Meralco earlier said that the concession package that was signed between Meralco and First Gas resulted in immediate saving of P 10.6 billion.

"Meralco's sincerity in trying to mitigate the effects of increased energy costs on its customers could have been more appreciated if it sought provisional approval for rate decreases resulting from renegotiation of contracts with its IPP's, rather than asking for a rate increase as applied for Simply put, the commission should have allowed Meralco to decrease its first before granting it a rate increase," the group said.

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