MER - gap up

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ERC allows power firms to give 'special rates'

The Energy Regulatory Commission (ERC) is allowing power firms to offer "preferential rates" to their customers even without its prior consent. In a Sept. 19 order, the regulatory body said it had said in previous decisions that "the grant of preferential rates to qualified consumers should be considered as a business decision." But it also said certain conditions should be fulfilled when offering special rates. The order stated that any reduction in revenues of state-owned producer National Power Corp. (Napocor), state-owned grid operator National Transmission Corp. (Transco) and private distribution utilities as a result of providing preferential rates to their customers should not be recovered from or passed on to other clients. Also, any losses that might be incurred by these power companies should not result in any form of cross-subsidy. When giving preferential rates to a certain group of customers, the ERC said power firms should treat all similarly situated customers in the same way and give them the same privilege. To ensure that this order would not result in any rate irregularities, the ERC has ordered Napocor, Transco and all distribution utilities to submit lists of customers that will be getting preferential rates. These submissions would be done twice a year, on Jan. 15 and July 15, according to the order. Power users in 10 industrial estates and three economic zones within the franchise of retailer Manila Electric Co. (Meralco) franchise will soon be treated to lower power rates, following the issuance of this particular ERC order, as well as a letter from ERC Chairman Rodolfo Albano Jr. to immediately implement special rates for these areas. Albano said that even if Meralco and Napocor had yet to formally file with the regulatory body their agreement on preferential rates, they could already implement these. From as much as almost P5 per kilowatt-hour in the past months, economic zone locators will enjoy a generation rate of only P3.52 per kWh, under the Meralco-Napocor agreement. Napocor will provide up to 2,500 gigawatt-hours (GWH) of power at this low rate each year. "If Meralco wants more, then we're more than willing to sit down with them again," Napocor president Cyril Del Callar earlier said. "The volume starts from 1,900 GWh to a maximum of 2,500 GWh." Francisco said the special rate for economic zones could even go down to P3.49 per kWh and to P3.46 per kWh, if the demand volume goes up to a certain level.


MER = 86.5 (3.6%)

MER formed a gap up white candle and might be looking to test the resistance formed by both the 65MA and a tentative supply line.

Support:
85 - possible previous resistance, hence, possible level of support
84.5 - upper limit of the recent gap up

Disclosure: almost 1/4 of my portfolio is riding with MER

Good luck to all MER traders!

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