Meralco hikes electricity rate anew in September 2024

Customers of the Manila Electric Company (Meralco) should brace for higher electricity bills this month as the power distributor hiked its household rate due to higher transmission costs.

In an advisory, Meralco announced it is increasing its electricity rate by P0.1543 per kilowatt-hour (kWh), bringing the overall rate for a typical household to P11.7882 per kWh in September from P11.6339 per kWh in August.

The upward adjustment translates to an increment of P31 in the total bill of a typical customer consuming 200 kWh.

The power distributor attributed the increase in its household electricity rate to the P0.2913 per kWh increase in the transmission charge for residential customers "due to higher ancillary service charges following the resumption of commercial operations of the Reserve Market on August 5, 2024."

"Total ancillary service charges from the Reserve Market were double the charges from the National Grid Corporation of the Philippines' (NGCP) Ancillary Service Procurement Agreements (ASPAs)," Meralco said.

The company said the share of ancillary service charges to NGCP's transmission rate rose to more than 50%.

The power distributor said the decrease in generation charge was primarily driven by the peso's appreciation to its strongest level since December 2023, which affected 50% of PSA costs and 97% of IPP costs which were dollar-denominated.

"This led to the P0.2371 per kWh and P0.0529 per kWh reductions in PSA and IPP charges, respectively," Meralco said.

Meanwhile, the company said WESM charges likewise went down by P0.0514 per kWh.

"This already factored in the final of four installments of deferred May 2024 WESM costs earlier ordered by the Energy Regulatory Commission (ERC)," it said.

Meralco said PSAs, WESM, and IPPs accounted for 46.2%, 27.3%, and 26.4% of its total energy requirement for the period.

The company reiterated its earlier advisory that customers should expect an increase in generation costs from First Gas – Sta. Rita and San Lorenzo — next month following the ERC's approval of the implementation of adjusted rates for the two plants.

As directed by the ERC, the indigenous natural gas pricing under the new Gas Sale and Purchase Agreements (GSPAs) of the First Gas plants will be implemented starting September 2024 supply month, to be reflected in the October billing to customers, according to Meralco.

"In addition, the cost differential between the old and new GSPAs up to the August 2024 supply month will be recovered over 12 months beginning the October 2024 billing to customers," it said.

The power distributor said that taxes and other charges posted a P0.0177 per kWh net increase.

Meralco said pass-through charges for generation and transmission are paid to the power suppliers and the grid operator, respectively, while taxes, universal charges, and Feed-in Tariff Allowance (FIT-All) are all remitted to the government.

The company reiterated that its distribution charge has not moved since the P0.0360 per kWh reduction for a typical residential customer in August 2022.

Moreover, Meralco noted that the higher transmission charge more than offset the reduction in the generation charge, which went down by P0.1547 per kWh as charges from Power Supply Agreements (PSAs), Independent Power Producers (IPPs), and the Wholesale Electricity Spot Market (WESM) "all registered reductions." — VDV, GMA Integrated News