Meralco hikes electricity rate by 64 centavos in June

Customers of the Manila Electric Company (Meralco) should expect higher bills this month as the power distributor hiked its household rate due to higher generation charges resulting from tight supply conditions.

In an advisory on Thursday, Meralco said it hiked its rate by 64.36 centavos per kilowatt-hour (kWh), bringing the overall household rate to P12.075 per kWh in June from P11.4139 per kWh in May.

The upward adjustment may translate to an increase of around P129 in the total electricity bill of a typical customer consuming 200 kWh.

Meralco attributed the rate hike to the increase in generation charge by 34.66 per kWh due to higher costs from the Wholesale Electricity Spot Market (WESM).

“The increase in the generation charge this month would have been higher but Meralco took the initiative to cushion the impact of the higher pass-through costs to our customers with the help from some of our suppliers which deferred the collection of portions of their generation costs,” said Meralco senior vice president and head of Regulatory Management Office Atty. Jose Ronald Valles.

Deferred collection

Meralco said it, along with Quezon Power (Philippines) Ltd., San Buenaventura Power Ltd. Co. (SBPL), and South Premiere Power Corporation (SPPC), deferred the collection of around P500 million in generation costs, pulling down this month’s generation charge by 13.13 centavos per kWh.

The power distributor said the deferred collection will instead be billed on a staggered basis over the next three months, as cleared by the Energy Regulatory Commission (ERC).

“We are still waiting for regulatory approval of our 400-megawatt (MW) interim power supply agreement (PSA) with Limay Power Inc. which could significantly reduce our WESM exposure and generation costs,” said Valles.

WESM

Meralco said for June’s billing, WESM charges were higher by P1.5203 per kWh due to tight supply conditions in May as average demand went up by more than 1,200 MW.

Last month, the Luzon grid was on yellow alert for 12 days and was on red alert on May 23.

In addition, the persistently high spot market prices triggered the imposition of the secondary price cap 19% of the time, Meralco said.

Charges from Independent Power Producers (IPPs) also increased by 2.24 centavos per kWh, the power distributor said, citing lower average IPP dispatch and peso depreciation affecting around 98% of IPP costs that were dollar-denominated.

Offsetting the increase in the generation charge is the 29.88 centavos per kWh decrease in charges from PSAs following deferral of portion of generation costs and lower fuel costs of SPPC covered by its 2024 emergency PSA and SBPL.

WESM, IPPs, and PSAs accounted for 33%, 29%, and 38% of Meralco’s total energy requirement for the period.

Transmission charge

Meralco said transmission charge for residential customers also increased by 14.50 centavos per kWh due to higher ancillary service charges following the partial settlement of the 30% of the total reserve trading amount of all WESM trading transactions during the March 2024 supply period, as ordered by the ERC.

Moreover, the power distributor said the ERC also approved the implementation of a new Feed-in Tariff Allowance (FIT-All) rate of 8.38 centavos per kWh starting June 2024, from previous rate of 3.64 centavos per kWh, up by 4.74 centavis per kWh.

Taxes and other charges also registered a 10.46 centavos per kWh net increase, Meralco said.

The power distributor added that pass-through charges for generation and transmission are paid to the power suppliers and the grid operator, respectively, while taxes, universal charges, and FIT-All are all remitted to the government.

Meralco said its distribution charge has not moved since the 3.60 centavos per kWh reduction for a typical residential customer in August 2022.

Staggered collection

In a separate statement, House Deputy Minority Leader France Castro of ACT Teachers party-list called on distribution utilities (DUs) such as Meralco to split the impending power rate increase in the next billing cycle to lessen the impact on consumers.

Castro said such staggered collection is needed since authorities and Congress are still investigating the frequent red and yellow power alerts and forced shutdowns of nearly 50 power plants.

"While generation companies are still to be held accountable for the power rate hikes due to their outages, we call on distribution utilities to at least split the power rate increase in the next billing to lessen the impact to consumers. There should also be no electricity disconnections during this period," Castro said.

"If staggered power rate hikes are implemented, payment to generation companies by DUs should also be staggered, because some electric cooperatives are also cash strapped,” Castro said.

The staggered collection, Castro said, would be a small price to pay given the recent power plant failures.

“We hope that DUs would heed out our call and as in the Meralco case, we hope that the Energy Regulatory Commission (ERC) would immediately actand issue an order to this effect so that consumers can have some relief,” she added. — with reports from Llanesca T. Panti/ RSJ/ VAL, GMA Integrated News