April 21, 2014

Court TRO on December rate hike ends today

The temporary restraining order (TRO) issued by the Supreme Court on a hefty power rate adjustment last December is scheduled to expire today. Meralco (MER, Buy) earlier applied for a phased implementation of a P4.15/kWh rate hike to pass on to its customers the hefty spike in power generation costs in December (pertaining to the November supply) as various power plants went on maintenance shutdown.

However, the court ordered MER to put off the adjustment pending resolution of complaints raised by various groups. Meanwhile, the regulator said that there would be no immediate rate hike or refund upon the expiration of the TRO as it still has to determine the appropriate rate for the period in contention.

Our take: The hefty rate hike may have been rendered moot after the regulator earlier voided the spot market prices for the November and December supply months. It has also ordered for a recalculation of the rates which, based on earlier estimates, will yield lower charges. – WealthSec