Meralco halts hike following customer complaint

Power retailer Manila Electric Co. (Meralco) has postponed a 22-percent hike in its basic distribution charge to allow the regulator to hear an opposing petition. The tariff increase, originally scheduled to take effect this month, was approved by the Energy Regulatory Commission (ERC) in December, the second price hike secured by the utility firm last year. Regulators allowed Meralco to raise tariffs by as much as 27 percent last May, its first price increase since 2003. Meralco is partly owned by conglomerates San Miguel Corp. and Metro Pacific Investments Corp., and a unit of the country's biggest firm Philippine Long Distance Telephone Co. The utility said it would suspend the rate hike until the regulator has resolved opposing petitions. The commission has scheduled a public hearing on February 5 for a complaint filed by a consumer. Meralco was supposed to increase its distribution rates by an average of P0.269 per kilowatt-hour (kWh) this year. "It's more of a rate design issue, it is being argued that lower rates should be given for the industrial [segment] and higher for residential [customers]," Ivanna G. de la Peña, Meralco vice-president and utility economics head, said in a phone interview. Meralco has informed the Energy Regulatory Commission of the rate hike's deferral. In a January 8 motion, Robert G. Mallillin argued against Meralco's rate structure, where industrial and commercial clients are charged more than residential customers. "It is quite clear that the applicant wished to cushion the increase for residential consumers by assigning more increases to the commercial and industrial sector," Mallillin said. De la Peña, however, said Mallillin's petition would mean "significant increases for the residential segment." "What he wants is a uniform increase across all customers, which means that increases for residential [customers] would be much higher," she said. On Dec. 14, regulators approved Meralco's average distribution rate increase for 2010 of P0.269/kWh to P1.4917/kWh, from P1.227/kWh. The increase is the utility's second under the new performance-based regulation system. It hiked rates in April 2009 following the approval of the new rate-setting scheme, by P0.257/kWh. De la Peña said a number of customers have already been billed under the new rates for 2010 in January, but said the suspension would be felt by all customers in February. When the suspension is lifted, de la Peña said Meralco would seek to recover the costs. In a statement, Meralco said its suspension plea had been prompted by the desire to give the ERC the opportunity to hear the Mallillin's plea. Meralco shares went down by a peso to P165 apiece on Wednesday. — Reuters and Jose Bimbo F. Santos, BusinessWorld