Following an increase in excise tax on coal, Manila Electric Co. (Meralco) filed a rate hike application for its power supply agreement (PSA) with a plant in Pagbilao.
Meralco and Therma Luzon Inc. jointly filed the application to the Energy Regulatory Commission (ERC) to increase the power generation cost from P0.0187 per kWh this year to P 0.0425 per kWh in 2019.
In 2020, the cost will increase to P 0.0667 per kWh and beyond once the extension of their PSA is approved.
Starting January 1 this year, excise tax on imported and domestic coal increased due to Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law.
“Among other things, the TRAIN Law increased the excise tax on coal from P10.00/metric ton to P50.00/metric ton, effective January 1, 2018. This tax is to increase year-on-year, up to P150.00/metric ton for coal, effective January 1, 2020,” their joint application said.
Meralco is also asking for its own captive generation cost at P 0.0013 per kWh for 2018; P 0.0030 per kWh for 2019; and P0.0047 per kWh for 2020, exclusive of its generation cost.
“It bears emphasis that in its Decision dated 17 December 2012, the Honorable Commission recognized the pass-through nature of fuel costs, which include the excise tax on coal,” the companies said.
Meralco said the said the increase in the excise tax for coal will be included and charged in the monthly fees of the customers.
While Meralco and Therma Luzon has already earned the approval for their PSA in 2012 for 350 megawatts (MW), they’re still waiting for the approval of their application to extend the contract when it ends next year.
Meralco has a legislative franchise to distribute electricity in the cities and municipalities of Metro Manila, Bulacan, Cavite and Rizal, and certain areas in Batangas, Laguna, Quezon and Pampanga. It is authorized to charge its customers for their electricity consumption at the rates approved by the ERC.
Therma Luzon is an independent power producer administrator. They manage and control the contracted capacity of the 700-MW coal-fired power generating facility in Pagbilao, Quezon.