Meralco opens 2021 with power rate hike

Customers of the Manila Electric Company (Meralco) will welcome the first month of 2021 with higher electricity rates.

On Friday, the power distribution utility announced that after a series of power rate reductions in 2020 totaling P1.39 per kilowatt-hour (kWh), power rates for a typical household will increase by P0.2744 per kWh to P8.7497 per kWh this January from P8.4753 per kWh in December 2020.

The power rate increment is equivalent to an increase of around P55 in the total bill of residential customers consuming 200 kWh this month.

“Despite the increase, this month’s overall rate is still more than P0.70 per kWh lower than January 2020’s rate of P9.4523 per kWh,” Meralco said.

A report by Maki Pulido on "24 Oras" said Meralco will start to serve disconnection notice to concerned customers who have yet to settle their dues.

"There's a process involved naman d'yan. Kung natanggap din naman nila, they still have time to settle their arrears but I think by next week we may be implementing already the collection due and demandable," Meralco vice president Joe Zaldarriaga said.

Mitigating January’s rate increase is the inclusion of Energy Regulatory Commission-approved adjustments for Meralco’s pass-through over/under-recoveries for the period January 2017 to December 2019.

In an order released December 29 2020, the ERC ordered Meralco to refund over-recoveries in transmission and other charges over a period of approximately three months until fully refunded and to collect an under-recovery in the generation rate for approximately 24 months until fully collected.  

The initial impact to residential customers is a net refund of around P0.1150 per kWh, Meralco said.

The power distributor explained that the overall rate increase was mainly brought by higher generation charge.

For this month, generation charge is P4.4574 per kWh, P0.3058 higher than December’s generation charge of P4.1516 per kWh, according to Meralco.

However, the company said that this month’s generation charge is still lower than last year’s rate of P4.9039 per kWh.

Likewise, power supply agreements (PSA) and independent power producer (IPP) rates increased by P0.2723 and P0.2428 per kWh, respectively, as Luzon peak demand in December decreased by 252 MW, from 9,886 MW to 9,634 MW due to cooler temperature and more non-working holidays compared to November.

“Similarly, the demand for power in Meralco’s franchise in December fell to its lowest level since lifting of the ECQ (enhanced community quarantine) in May,” the company said.

“Lower demand led to fixed costs from power suppliers being spread over lower energy volume, resulting in higher effective generation rates to consumers,” it added.

Meanwhile, the Wholesale Electricity Spot Market (WESM) rate decreased by P0.6135 per kWh.

“PSAs, IPPs, and WESM provided 56.4%, 37.3%, and 6.3% of Meralco’s energy requirements, respectively,” the company said.

Transmission charge for residential customers, on the other hand, registered a reduction of P0.0236 per kWh due to the refund of transmission over-recoveries, while taxes and other charges registered a net decrease of P0.0078 per kWh, despite the recently approved increase in Feed-in Tariff Allowance (FIT-All).

In a decision released last December 29, 2020, the ERC authorized the collection of a FIT-All of P0.0983 per kWh effective in the January 2021 billing cycle.

This resulted in a P0.0488 per kWh increase in the FIT-All this month, from the previously approved FIT-All of P0.0495 per kWh, Meralco said.

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

Meralco noted that distribution, supply, and metering charges, meanwhile, have remained unchanged for 66 months, after these registered reductions in July 2015.

It also reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the National Grid Corp. of the Philippines.

Taxes and other public policy charges like the Universal Charges and the FIT-All are remitted to the government, it said. —KBK, GMA News