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Meralco hikes rates in April as spot market prices rise

Power lines run beside a sign for the Manila Electric Co. (Meralco) Makati branch in Manila, the Philippines, on Monday, March 23, 2009. Manila Electric Co. is the largest Philippine power retailer.

Power rates for April rose by P0.0872 per kilowatt hour (kWh) to P8.4067 kWh, from last month’s P8.3195, which is equivalent to an increase of around P17 in the total bill of residential customers consuming 200 kWh, the Manila Electric Co. (Meralco) reported Thursday.

Meralco said the rates reflect higher generation charge and spot market prices.

Generation charge for April is P4.5370 per kWh, P0.1621 higher than last month’s P4.3749 per kWh.

WESM (Wholesale Electricity Spot Market) charges increased by P2.5991 per kWh due to tighter supply conditions in the Luzon grid. Peak demand in Luzon increased by almost 1,000 megawatts (MW) in March as a result of warmer temperature, while unavailable capacity from plant outages remained above 3,400 MW. WESM share is slightly down to 11 percent this month.

Mitigating the increase in WESM charges are the lower costs from Independent Power Producers (IPPs) and Power Supply Agreements (PSAs). Charges of IPPs and PSAs declined by P0.2090 and P0.1371 per kWh, respectively, due to improved average plant dispatch and peso appreciation.  The shares of IPPs and PSAs this month were 39 percent and 50 percent, respectively.

Meanwhile, the transmission charge for residential customers decreased by P0.0856 per kWh mainly due to lower ancillary service charges, while taxes and other charges registered a net increase of P0.0107 per kWh.

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

Meralco’s distribution, supply, and metering charges, meanwhile, have remained unchanged for 69 months, after these registered reductions in July 2015.

Meralco 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 NGCP. Taxes and other public policy charges like the Universal Charges and the FIT-All are remitted to the government.

This month’s overall rate is still P0.5884 per kWh lower than last year’s rate of P8.9951 per kWh.

Also, it includes the ERC-approved adjustments for pass-through over/under-recoveries for the period January 2017 to December 2019.

The ERC directed Meralco last December to refund over-recoveries in transmission and other charges over a period of approximately three months and to collect an under-recovery in the generation rate for approximately 24 months.

Meralco implemented the ERC-approved adjustments starting January 2021. The impact to residential customers, from the months of January to April 2021, is a net refund of around P0.1150 per kWh.

Also, Meralco continues to implement the Distribution Rate True-Up refund, which began in March 2021. The ERC provisionally approved Meralco’s proposal to refund around P13.9 billion over a period of 24 months or until the amount is fully refunded.

This amount represents 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.  For residential customers, the refund rate is P0.2761 per kWh and will appear in customer bills as a line item called “Dist True-Up.”

Image credits: (Bloomberg)

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