Meralco Confirms Slight Power Rate Hike This Month

After two consecutive months of rate reductions, customers of the Manila Electric Co. (Meralco) will see a slight uptick of P0.0625 per kilowatt-hour (kWh) in electricity bills this month due to higher electricity spot market charges and a weaker peso.

In a virtual briefing on Thursday, March 10, Meralco vice president and head of corporate communications Joe Zaldarriaga said the increase in overall rate from P9.5842 per kWh last month to P9.6467 per kWh this month would add around P13 in the total bill of a residence consuming 200 kWh.

For the electricity bill’s largest component, the generation charge went up by P0.2780 per kWh mainly due to higher charges from the wholesale electricity spot market (WESM), which increased by P13.4211 per kWh.

“Despite improvement of supply conditions in the Luzon grid, WESM prices remained elevated in February and the secondary price cap was imposed 5.63 percent of the time. With the increase in demand and the scheduled maintenance outage of the Quezon Power and First Gas-San Lorenzo plants, Meralco sourced additional supply from the WESM in the February supply month,” Zaldarriaga said.

The company also cited the P0.1625 per kWh rise in charges from Independent Power Producers (IPPs) due to the lower dispatch of Quezon Power and First Gas-San Lorenzo.

“Quezon Power is on scheduled maintenance outage since Feb. 5, while First Gas-San Lorenzo Modules 60 and 50 are on maintenance outage since Jan. 20 and Feb. 14, respectively,” Zaldarriaga said.

“These maintenance shutdowns were performed to ensure availability of their supply during the summer months and the election period,” he said.

The company official also cited the peso’s depreciation against the US dollar which contributed to the increase in IPP costs, since around 97 percent of these costs are dollar denominated.

Charges from power supply agreements (PSAs) were higher by P0.1510 per kWh, as the dispatch of First NatGas-San Gabriel plant continued to be affected by Malampaya facility’s inability to supply sufficient natural gas. Lower excess energy deliveries, which are priced at a discount, also contributed to the increase in PSA costs.

For the supply month, WESM, IPPs and PSAs accounted for 13.9 percent, 32.7 percent and 53.4 percent, respectively, of Meralco’s energy requirement.

Refund, deferred collections mitigate rate hike

This month’s rate increase was mitigated by the implementation of an additional distribution rate true-up refund.

Zaldarriaga said the power utility received an order from the Energy Regulatory Commission (ERC) to refund another P4.8 billion – which covers December 2020 to December 2021 – to customers for 12 months. The refund is equivalent to P0.1923 per kWh for residential customers.

The ERC refund order is on top of Meralco’s approved refund amounting to P13.9 billion, which is equivalent to P0.2761 per kWh for residential customers starting March last year.

In total, residential customers will see a total of P0.4684 per kWh refund under line item called “Dist True-Up” in their bills this month.

Meralco also took the initiative to cushion the impact in the bills of its customers by coordinating with some of its suppliers to defer collection of portions of their generation costs.

The deferred charges will subsequently be billed on a staggered basis over the next three months as directed by the ERC.

The deferred charges from Quezon Power and First Gas plants amount to P500 million, equivalent to about P0.18 per kWh starting in April, Meralco VP and head of utility economics department Lawrence Fernandez said.

Transmission charge, taxes and other charges for residential customers registered a net decrease by P0.0232 per kWh.

Meanwhile, the collection of the Universal Charge-Environmental Charge amounting to P0.0025 per kWh remains suspended, as directed by the ERC.

Meralco reiterated that it does not earn from the pass-through charges from generation and transmission, as payments go to the power suppliers and system operator, respectively, while taxes, universal charges and Feed-in Tariff Allowance (FIT-All) are remitted to the government.

Distribution, supply and metering charges, which are the only costs that go to Meralco, have remained unchanged since their reduction in July 2015.

Oil price impact

With the continued spike in oil prices, Meralco will see its impact in May bills if world crude prices continue to be elevated, Fernandez said.

This is because Meralco’s biggest source of supply is from gas plants that use Malampaya gas, the price of which is indexed to world crude prices.

“For now, we will not feel the impact of the oil price hikes since the Malampaya price is updated every quarter. The next update is April, and this will be reflected in May,” Fernandez said.

Meralco is urging customers to implement energy efficient measures, which will help in better managing consumption, especially in summer months when it historically increases by 10 to 40 percent, said Ferdinand Geluz, Meralco chief commercial officer and head of customer retail services.

Customers can also save on energy consumption when energy efficiency practices are done right. Keep the air conditioning unit (ACU) on when leaving the house for a quick one-hour errand. This is 17 percent more cost-efficient because by turning it off, the ACU compressor works harder to cool the room again leading to an increase in consumption.

When leaving the house for just two days, it is 12 percent more cost efficient to keep refrigerators on instead of turning them off.