Meralco rates up this month

MANILA, Philippines — Higher generation charge pushed up rates of the Manila Electric Co. (Meralco) this March, following a slight reduction last month.

Meralco said the overall rate for a typical household this month is higher by P0.5453 per kilowatt-hour, to P11.4348 per kWh from the previous month’s P10.8895 per kWh.

The adjustment is equivalent to an increase of around P109 in this month’s power bills for residential customers consuming 200 kWh, P164 for those
 consuming 300 kWh, P218 for 400 kWh and P273 for 500 kWh.

“The upward adjustment is because of the higher generation charge at P0.4636 per kWh,” Meralco vice president and head of corporate communications Joe Zaldarriaga said at a briefing yesterday.

Meralco said the generation charge rose by P0.4636 to P7.3790 from P6.9154 per kWh the previous month due to higher supply costs.

“This month’s generation charge increase would have been significantly higher, but we took the initiative to cushion the impact in the bills of our customers by coordinating with some of our suppliers to defer collection of portions of their generation costs,” Meralco head of regulatory management office Jose Ronald Valles said.

Valles said a total of around P1.1 billion in deferred costs reduced this month’s generation rate by about P0.40 per kWh.

The remaining P0.40 per kWh will be billed on a staggered basis over the next two months or in April and May, as coordinated by the power distributor with the Energy Regulatory Commission.

“The generation charge was supposed to increase by P0.87 per kWh if implemented one time. In the total rate, if we include the other factors like the VAT, its effect would have been a more than P1 increase in the electric rate for March,” Meralco vice president and head of utility economics department Lawrence Fernandez said.

“But because Meralco, along with the suppliers who cooperated with the plan, a part of that cost will be charged on an installment basis. So instead of an P0.87 per kWh increase in generation charge, it will be P0.46, so that the total rate increase will only be P0.55 instead of more than P1 per kWh,” he said.

Fernandez said the P0.40-per-kWh deferred amount will be collected in the next two months without interest, which is P0.20 per kWh each for April and May.

“At the end of the day, we have to help our consumers manage the cost so we really had to find a way to make it easy for them somehow to make the overall cost of electricity less painful for them,” Zaldarriaga said.

The generation charge accounts for more than half of the electric rate.

It is a pass-through charge which is paid to the power suppliers.

Meralco saw charges from independent power producers (IPPs) increase by P0.5784 per kWh as suppliers had to use more expensive alternative fuels to ensure the continuous supply of electricity.

Peso depreciation, which affected 98 percent of IPP costs that are dollar-denominated, also contributed to the higher IPP charges. IPPs accounted for 35 percent of Meralco’s total energy requirement for the supply period.

Charges from the Wholesale Electricity Spot Market (WESM) likewise went up by P1.4795 per kWh as a result of higher demand in the Luzon grid.

Meralco said that due to the tighter supply conditions, the secondary price cap, which was not triggered in January, was imposed 7.06 percent of the time in the February supply month.

Meralco sourced 22 percent of its total requirement from the WESM during the supply period.

As for charges from power supply agreements (PSAs), Meralco said they remained generally flat, largely due to the deferral of collection of a portion of PSA costs.

PSAs covered the remaining 43 percent of the company’s total requirement in the last supply month.

Meanwhile, Meralco said all other charges, including transmission charge and taxes, registered a net upward adjustment of P0.0817 per kWh.

Pass-through charges for transmission are paid to the grid operator, while taxes, universal charges and Feed-In Tariff Allowance are all remitted to the government.

Meralco’s distribution charge, on the other hand, has not moved since the P0.0360 per kWh reduction for a typical residential customer in August 2022.

The power distributor is still implementing one distribution-related refund, equivalent to P0.8656 per kWh for residential customers, which continues to temper their monthly bills.

The final refund is set to be completed by May.