Meralco hikes March power rates

Apart from the skyrocketing fuel prices, consumers would have to tighten their belts further as the Manila Electric Co. (Meralco) announced Thursday an increase in household electricity rates for March.

Meralco said it hiked its household rate by P0.0625 per kilowatt-hour (kWh) bringing the overall rate for this month to P9.6467/kWh from February’s P9.5842/kWh.

The upward adjustment came after two consecutive months of power rate reductions.

The rate hike translates to an increase of around P13 in the total bill of a residential customer consuming 200 kWh.

Generation charge

Meralco attributed the rate increase to the uptick in generation charge by P0.2780 to P5.4737/kWh from P5.1957/kWh in February, mainly due to higher charges from the Wholesale Electricity Spot Market (WESM).

“Despite improvement of supply conditions in the Luzon grid, WESM prices remained elevated in February and the secondary price cap was imposed 5.63% of the time,” the power distributor said.

“With the increase in demand and the scheduled maintenance outage of Quezon Power and First Gas-San Lorenzo plants, Meralco sourced additional supply from the WESM in the February supply month. As a result, WESM charges increased by P13.4211/kWh,” it added.

Meralco, however, said March’s generation charge increase would have been significantly higher, but the company “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.”

“These deferred charges will subsequently be billed on a staggered basis over the next three months as directed by the ERC,” it said.

Meanwhile, charges from Independent Power Producers (IPPs) rose by P0.1625/kWh mainly due to the lower dispatch of Quezon Power and First Gas-San Lorenzo.

Quezon Power is on scheduled maintenance outage since February 5, while First Gas-San Lorenzo Modules 60 and 50 are on maintenance outage since January 20 and February 14, respectively., Meralco said.

It explained that the maintenance shutdowns were performed to ensure availability of their supply during the summer months and the election period.

Peso depreciation against the US dollar also contributed to the increase in IPP costs, since around 97% of these costs are dollar-denominated, the power distributor said.

Meralco, likewise, said charges from Power Supply Agreements (PSAs) were higher by P0.1510/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, it said.

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

Refund

“The overall increase in this month’s power rates would have been higher if not for the implementation of an additional Distribution Rate True-Up refund,” Meralco said.

To recall, Meralco’s proposal to refund around P13.9 billion distribution-related charges was approved by the Energy Regulatory Commission (ERC) in early 2021.

This is equivalent to a rate refund of P0.2761/kWh for residential customers, implemented beginning March 2021, Meralco said.

This amount represented the difference between the Actual Weighted Average Tariff and the ERC-approved Interim Average Rate for distribution-related charges for the period July 2015 to November 2020, it added.

On March 7, 2022, Meralco said it received an ERC Order dated February 23, 2022 expanding the coverage of the refund to include the December 2020 to December 2021 period – amounting to an additional P4.8 billion.

“For residential customers, the refund is equivalent to another P0.1923/kWh that will be implemented over a period of 12 months,” it said.

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

Other charges

The power distributor said transmission charge, taxes, and other charges for residential customers registered a net decrease by P0.0232/kWh.

Likewise, the collection of the Universal Charge-Environmental Charge amounting to P0.0025/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 the 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 its reduction in July 2015, the company said.

In the succeeding months, Meralco said it expects the continuing increase on global fuel prices would have a significant impact on power rates, particularly on the generation charge, and urged its customers to be extra efficient when using electricity.

“Being energy efficient will also help them better manage their consumption, which historically increases by 10% to 40% during the summer months,” it said.—AOL, GMA News