MANILA, Philippines - The Energy Regulatory Commission (ERC) has allowed Manila Electric Co. (Meralco) to increase its average rates by 26.9 centavos per kilowatt hour (kWh) next year. Meralco, however, said the rate hike would not be felt due to a drop in other charges next month.

Meralco will increase its distribution, supply, and metering charges for 2010 for its various customers. But with the 26 to 27-centavo per kWh drop in generation charge next month, as well as the 3-centavo decline in system loss charges, Meralco customers will see a net reduction of 2 to 3 centavos in their January bill.

The utility firm said the decline in generation charges is due to the lower-priced gas used by independent power producers supplying 55% of Meralco's requirement.

"Even with the PBR (performance-based regulation) adjustment of 26.9 centavos recently approved by ERC, customers will still see a net reduction of around 2 to 3 centavos in their January bills," Meralco vice president and utility economics head Ivanna dela Pena said in a statement released Tuesday.

"The ERC is optimistic that, nothwithstanding the increase in Meralco's rates, the reduction in the other charges in the customers' total bill will be more than sufficient to mitigate or even offset the impact of this adjustment," ERC executive director Francis Saturnino Juan said in a separate statement. With a report from Reuters