Electric rates rising mid-2023 after Meralco refunds done

ELECTRICITY rates are expected to go up starting June next year after all the distribution-related refunds now being implemented by the Manila Electric Company (Meralco) are completed by May 2023.

“This means rate impact of the refund completion will be felt beginning June 2023,” Meralo utility economics head Lawrence Fernandez said.

He was referring to the Distribution Rate True-Up (DRTU) refund orders of the Energy Regulatory Commission (ERC) that will be completed by November and December this year, and January and May of next year.

DRTU-1 worth P13.89 billion was implemented in March 2021. The average refund rate of P0.27 per kilowatt hour (kwh) for residential customers will end in December this year.

DRTU-2 worth P4.84 billion started in March 2022 and will end in January 2023. During this period, residential customers are entitled to a P0.19 per kwh of refund.

The implementation of DRTU-3 is from May to November this year.  The total refund amounted to P7.8 billion or P0.47 per kwh for residential customers.

“DRTU-3 is expected to be completed this November so that 47-c/kwh deduction in residential rates will not be present starting December. In January and February 2023, the deductions of 28 and 19 centavos per kwh, respectively, will go away,” said Fernandez.

DRTU-4 is from July this year up to May 2023. The P21.8-billion refund is equivalent to P0.87 per kwh of savings to residential customers. “DRTU-4 is projected to be completely refunded by May 2023. This means rate impact of the refund completion will be felt beginning June 2023,” added Fernandez.

All four DRTU adjustments have reached P1.80 per kwh for residential customers. This means that after Meralco would have completed the implementation of DRTU 1 to 4, residential customers will see an increase in their electricity bills.

“Currently, the refunds being experienced by residential customers of Meralco total P1.80 per kwh. Once all four refunds are completed by May, the total increase that will be felt by households will similarly be P1.80 per kwh,” said Fernandez.

The DRTU adjustments helped temper customers’ monthly bills for the past months.

FIT-All suspension

To help reduce electricity rates, the ERC said it is crafting a resolution on the possible three-month suspension of FIT-All rates.

The FIT-All is a uniform charge billed to all on-grid electricity consumers, reflected as a separate component in monthly electricity bills, to cover payments to renewable energy developers who are assured of a fixed rate per kWh for electricity generated by their projects over 20 years.

ERC chairperson Monalisa Dimalanta said Thursday that the agency is reviewing other rate adjustments that could help cushion the impact of the completion of the four DRTU-related refunds.

“We are still studying other pending adjustments related to over and under calculations. Hopefully, there could be more refund. That’s why we are studying everything, including the FITAll suspension para may pang salo [so there is a buffer],” she said. “It could be suspended for three months and, hopefully, that will help cushion or reduce the power rates,”Dimalanta added.

She revealed that a resolution to suspend the implementation of FIT-All for three months has been crafted.  “We have already deliberated the resolution to suspend but we want to make sure that RE developers would still be paid in full.

The FIT-ALL rate was set at P3.64 per kwh beginning October 2022, as directed by the ERC and relayed by the National Transmission Corp. (TransCo), which administers the FITAll fund.

“It is small that’s why we are still looking for more that could help bring down overall rates. At the same time, we are reviewing fuel costs that are being passed on by non-RE generators. If, upon review, we find out that there is no basis to pass this on then that will translate in a reduction also,” she added.

Meralco said the suspension of FITAll will benefit all electricity consumers nationwide.

Meanwhile, Dimalanta said SMC Global Power Holdings Corp. (SMCGP) has asked the Court of Appeals (CA) to overturn its earlier decision that denied the joint petition with the Meralco to recover losses from its fixed-rate power supply agreements (PSAs).

“They filed a petition for certiorari before the Court of Appeals last Monday. San Miguel is seeking a TRO but Meralco is not part of it. They are asking CA to issue a TRO so the order will not be implemented and they are also asking the CA to reverse our decision. We already referred this to the OSG [Office of the Solicitor General],” said Dimalanta.

It maybe recalled that the ERC, in its orders dated September 29, denied the joint motions of Meralco with South Premiere Power Corporation (SPPC) and San Miguel Corporation (SMEC) for price adjustments to serve as temporary relief covering a combined P5.2 billion losses incurred by SPPC and SMEC from January to May 2022 due to the unprecedented spike in fuel prices.

SPPC and SMEC, which are both units of SMCGP, sent notices dated October 5, 2022, to Meralco stating their plan to continue to supply at the rates provided under the PSAs executed in 2019, albeit under protest.