ELECTRICITY rates in the franchise area of the Manila Electric Company (Meralco) are going up this month by P0.2353 per kilowatt-hour (kWh) to P8.9071 per kWh, mainly due to charges in the Wholesale Electricity Spot Market (WESM).
The overall rate for a typical household, or those with an average monthly consumption of 200 kWh, increased by P0.2353 per kWh, from last month’s P8.6718 to P8.9071 per kWh this month. This is equivalent to an increase of around P47 in the total bill.
Generation charge—a major component of a power bill—for July stood at P4.8707 per kWh, a P0.2536 increase from last month’s P4.6171 per kWh.
WESM charges remained high at P8.7424 per kWh due to tight supply conditions in the Luzon grid, aggravated by the ongoing Malampaya natural gas supply restriction.
It can be recalled that the Luzon grid was placed on Red Alert from May 31 to June 2 and on Yellow Alert on June 4 as major power plants went on forced and prolonged shutdowns, shaving off as much as 4,000 megawatt (MW) of power from the grid.
Moreover, Luzon demand reached 11,640 MW on May 28, the highest so far on record.
As a result of these, WESM prices were persistently high for extended periods, almost doubling the times when the secondary price cap was imposed during the June supply month.
Charges from Independent Power Producers (IPP) also increased by P0.1929 per kWh. With reduced gas supply from Malampaya, affected plants resorted to the use of more expensive liquid fuel to continue operating and avoid more or longer brownouts.
IPP charges were also pushed up by the peso’s depreciation, as dollar-denominated charges account for 97 percent of IPP costs. Meanwhile, cost of power from Power Supply Agreements (PSA) decreased by P0.0521 per kWh.
WESM, IPPs, and PSAs provided 7.8 percent, 39.5 percent, and 52.7 percent of Meralco’s energy requirement this month, respectively.
Meanwhile, transmission charge for residential customers registered a reduction of P0.1463 per kWh due to a significant decrease in Ancillary Service charges. Taxes and other charges registered an increase of P0.1280 per kWh.
Meanwhile, collection of the Universal Charge-Environmental Charge remains suspended, as directed by the Energy Regulatory Commission (ERC).
Distribution, supply, and metering charges of Meralco have remained unchanged.
Meralco said this month’s increase was tempered by the continued implementation of the Distribution Rate True-Up refund, which began March. 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 appears in customer bills as a line item called “Dist True-Up.”