Manila Electric Co. (PSE:MER) reports that it will hike up its rates by P.12 per kilowatt hour starting this month. The increase in charges are primarily due to increase in the utility's fuel costs from P5.40 to P5.50 per kwh. The increase will be seen as part of generation cost in the consumer's electricity bill. Transmission charge also went up by P.04 per kwh due to higher ancillary or back-up generation costs.
MER also said they will start collecting adjustments to the bill deposit from consumer's electricity connection and distribution. Collections will be made starting January next year over a staggered period of 12 months. The company describes the bill deposit as "an amount required from customers of all distribution utilities as a guarantee for payment of electric bills."
Effect on Consumers
Any increase in fees are generally not met well by consumers. MER had to meet with Energy Regulatory Commission (ERC) and agree to spread out the collection period for 12 months instead of one-time amid complaints received from consumers of the added burden. But since the service they cater is a basic necessity, decline in no. of households using electricity is highly unlikely.
Effect on Stocks
As of Friday, MER stocks price closed at P277 per share. The increase in rates will most likely not have any impact on overall net income as it is merely to cover higher operational costs. As such, we do not see any direct impact on the stocks performance.
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Disclaimer: This article is solely the opinion of the author based on personal research. Any statement made is not a conclusion of absolute fact and is not intended to impose or persuade anyone's judgement.