Meralco to credit $2.059M payouts in Sept

Meralco begins paying around US$2.059 million worth of payouts next month for about 800,000 incidents where service commitments were not met. Incidents are the number of times that Meralco was unable to meet Guaranteed Service Levels provided under the performance-based rate mechanism. Customers are compensated if the distribution utility is unable to meet performance thresholds in duration and frequency of power interruptions, restoration time and connection time. The said amount is for the first regulatory year of the PBR, which was from July 2007 to June 2008.

The number of incidents does not necessarily correspond to number of customers who would benefit from the payout as a customer could experience more than one incident, while other customers may not even experience a single incident in a given regulatory year.

Meralco president Jose de Jesus said, "We will be paying out fines to customers starting September. Customers will be notified if they are entitled to the payout, the cash equivalent of which will be credited to their future billings."

De Jesus said the paying out of fines to customers is among the features of the PBR mechanism. The PBR is a new rate setting method approved by the Energy Regulatory Commission that penalizes distribution utilities, such as Meralco, in the event that they fail to comply with set standards.

The GSLs set by the ERC provide a guideline by which penalties are determined. As an example, Meralco has to pay US$2.47 to customers who would experience a total duration of sustained service interruptions that exceeds 35 hours in a regulatory year. Meralco also has to pay the same amount of US$2.47 to customers who would experience a number of sustained service interruptions that exceeds 25 times in a regulatory year.

Moreover, Meralco will pay a customer US$2.47 if restoration of supply to his electric service after a fault on the secondary distribution network takes longer than 15 hours. Lastly, Meralco will be penalized US$0.968 per day that it fails to provide electric service connection on the day agreed with the customer.

Another batch of payouts will be conducted this coming November, where Meralco will pay about P64 million worth of fines for more than 500,000 incidents. This covers the second regulatory year of the PBR, which is from July 2008 to June 2009. Entry into PBR was mandated by the Electric Power Industry Reform Act. Other distribution utilities employing the said mechanism are Cagayan Electric Power and Light Company, Dagupan Electric Corporation, Iligan Light and Power Inc., Mactan Electric Company, and Cotabato Light and Power Company.

"The PBR is surely a way to move forward since it advances the interest and welfare of electricity consumers," said De Jesus.