Aug. 11--AFTER enjoying four straight months of cheap power from its suppliers, Manila Electric Co. (Meralco) wants to jack up its distribution charge under its new rate-setting regime.

In a petition lodged before the Energy Regulatory Commission on Saturday, Meralco is seeking a new average distribution, supply and metering rate of P1.49 per kilowatt-hour.

This is P0.27 higher than its current distribution, supply and metering charge of P1.22 per kilowatt-hour.

This represents the component of electricity bills that the utility sets aside for itself. In contrast, other charges such as for generation and transmission are "pass-through" costs that go to its suppliers and the grid operator, respectively.

Ivanna de la Pena, Meralco vice president and utility economics head, said the proposed adjustment, which will still undergo public hearings at the ERC, covers the utility's maximum average price for its 2010 regulatory year that runs from July 2009 to June 2010.

The adjustment is in line with its performance-based regulation (PBR) rate setting scheme that was prescribed by the ERC in 2007.

The PBR is an internationally accepted rate setting mechanism whereby a utility's rates are determined by the quality of its service to its customers.

It also grants a utility a yearly adjustment on its tariffs, such as the one filed for by Meralco in light of inflation and foreign currency exchange fluctuations as well as its obligations to its franchise area in Metro Manila and outlying provinces.

The impact of the petitioned rate hike borne from the PBR depends on customers' consumption level and classification.

But the bulk of its customers--those whose electricity use ranges from 201 to 300 kilowatt-hours per month--would have to shoulder a P0.54 per kilowatt-hour increase in their distribution, supply and metering charge, rising from P1.65 to P2.19 per kilowatt-hour should the petition be approved.

Around 70 percent of Meralco's over 4.63 million customers are classified as residential.

The company's rate hike application follows a spate of petitions for rate increases that has overshadowed four straight months of low generation charges.

From P5.02 per kilowatt-hour in April, Meralco's cumulative rates (inclusive of generation, transmission, distribution and other charges) went down by P0.92 to P4.10 per kilowatt-hour in August because of cheap power from its suppliers.

However, Meralco earlier filed for a P0.03 per kilowatt-hour hike to recover payments it made to the transmission line operator.

State-owned National Power Corp., which supplies about half of the electricity that Meralco distributes, has pending petitions for a P1.51 per kilowatt-hour and a P0.17 per kilowatt-hour increase in Luzon to recover from consumers the higher cost of producing electricity.

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