Manila, Philippines — (METERING.COM) — December 11, 2008 – Customers of the Manila Electric Company (Meralco) consuming less than 21 kWh of power per month will get their electricity free starting next month, under a new ruling issued by the Energy Regulatory Commission (ERC).
Previously these customers received a 50 percent discount on their electricity costs, but in terms of the ruling the discount has been increased to 100 percent. These customers will only need to pay the monthly metering charge of P5 (about 10 US cents).
The decision was in response to a petition filed by the Department of Trade and Industry’s Bureau of Trade Regulation and Consumer Protection for the approval of a new lifeline rate for marginalized customers and other measures to achieve a reduction of power rates.
Under the lifeline structure customers consuming between 21 to 50 kWh per month receive a 50 percent discount, those consuming between 51 to 70 kWh per month a 35 percent discount, and those consuming between 71 to 100 kWh per month a 20 percent discount, and these discounts remain unchanged under the new structure.
The lifeline discount is applied to the total of the generation, transmission, distribution, supply, metering and system loss charges. Almost two million of Meralco’s four million residential customers enjoy the lifeline discount, and around 300,000 customers are believed to fall within the 0-20 kWh range.
However, the ERC denied a request to direct Meralco to charge distribution rates at least equal to or lower than the distribution charges of other private utilities, ruling that there are standards that must be complied with in setting the rates. It is unlikely for two distribution utilities to have the same cost of providing service to justify the adoption of the same rates for them.
In addition to the modification of the lifeline structure, the ERC approved a new system loss cap for distribution utilities, lowering the maximum recoverable rate of system losses (technical and non-technical). For privately owned utilities the threshold was lowered from 9.5 percent to 8.5 percent. For rural electric cooperatives the threshold was reduced to 13 percent from a previous rate of 14 percent.
The existing system loss cap for privately owned utilities has remained unchanged since 1999, while the cap for the rural cooperatives has not been changed since 2000. The new system loss caps will be effective starting January 2010.
“Rest assured that the ERC is continually and comprehensively reviewing other existing policies pertaining to rate setting, including efficiency models, lifeline components of other distributors and the different cost recovery adjustment mechanisms towards the promotion and protection of the long term interests of Filipino electricity consumer,” said ERC chairperson Zenaida G. Cruz-Ducut said.