Meralco customers to receive refund in March

MANILA — Customers of the Manila Electric Co. (Meralco) will receive a refund in March corresponding to the increase in Malampaya gas price of First Gas Power Corp.

Ronald Valles, Meralco’s senior vice president and head of regulatory management, stated that they are initiating the refund based on “guidance” from the Energy Regulatory Commission (ERC).

The ERC ordered Meralco to issue a refund, stating that the power distributor should have evaluated the increased natural gas prices from the Malampaya consortium before transferring the increment to consumers.

The power distributor raised its February rates by P0.5738 per kilowatt-hour, primarily attributed to the rise in fuel costs, including liquefied natural gas (LNG).

Meralco stated that it had previously contacted the ERC to request guidance on addressing the escalation in natural gas prices from its primary supplier, First Gen.

“While Meralco admits that a validation of the impact of the use of LNG and the new gas supply contracts is necessary in light of the terms of its power purchase agreements, up to this date, the ERC has not been provided with the results of Meralco’s validation,” ERC Chairperson Monalisa Dimalanta said.

“Pending Meralco’s validation of the basis of such charges, passing on of such costs to the consumers may be premature,” she added.

In a letter directed to the ERC, the power distributor acknowledged not having received a copy of the new gas supply and purchase agreement between the Malampaya Consortium and First Gen.

“What drove the increase in the generation charge which churned up by P0.4552 per kilowatt-hour is possible primarily due to higher cost of power from Independent Power Producers and Power Supply Agreements,” Meralco vice president and head of corporate communications Joe Zaldarriaga said at a press conference last week.

In a statement, Valles remarked that the increased gas prices represent pass-through costs, and Meralco would not be able to shoulder the equivalent expense to First Gas.

Regarding the LNG segment of the fuel cost for First Gas plants, Meralco indicated that they would submit “the appropriate pleading” to the ERC to confirm the pass-through costs.

“We emphasize that the use of LNG for commissioning is important to ensure that First Gas plants will continue to operate and supply power to Meralco at the least cost, in light of anticipated expiration of the Gas Supply Agreements between First Gas and the Malampaya consortium,” Valles said.