Meralco rates to go up in October, after 5-month downtrend

The Manila Electric Co. (Meralco) on Friday announced a slight increase in power rates for October, snapping five straight months of downward adjustments this year.

In an advisory, Meralco said it will hike electricity rates by P0.1212 per kilowatt-hour (kWh) this month. This brings the overall rate for a typical household to P8.5500/kWh from P8.4288/kWh in September.

“This is equivalent to an increase of around P24 in the total bill of residential customers consuming 200 kWh,” the power distributor said.

Despite the increase, Meralco said the overall rate is still significantly lower by P0.5362/kWh compared to October 2019, which was at P9.0862/kWh.

“The net rate reduction since the start of the year is still well over one peso per kilowatt hour,” Meralco said.

The power distributor attributed the hike to higher generation charge brought about by tighter supply conditions in the Luzon grid.

From P4.0860/kWh in September, the generation charge increased by P0.1373/kWh to P4.2233/kWh in October.

After six straight months of reduction totaling P0.5772/kWh, Meralco said the October generation charge is still P0.4399/kWh lower than in March.

“This month’s increase in generation charge is mainly due to higher Wholesale Electricity Spot Market (WESM) charges, brought about by tightened supply conditions and higher demand,” the power distributor said.

Malampaya

Meralco noted that the Malampaya natural gas restriction from August 28 to September 6 and forced outage of several large plants in the first week of September tightened the supply conditions in the Luzon grid.

“This led to WESM offering a cap of P32/kWh, the highest this year, on September 5 and 7 despite the absence of Yellow Alerts, it said.

“Higher Luzon demand and more generation capacity on outage resulted in P1.1605/kWh increase in WESM rate,” it added.

Had WESM prices remained at their August 2020 levels, the power distributor said the generation charge and the overall rate this month would have decreased by 8-centavos and 14-centavos, respectively.

“After being placed under MECQ in August, a rise in the Luzon demand was observed in September with the return to GCQ in Metro Manila and adjacent areas,” Meralco said.

“From August 2020’s peak demand of 10,422 megawatts (MW), peak demand in September was higher at 10,570 MW. September 2020’s peak was also higher than September 2019’s 10,392 MW, the first time since the start of the pandemic that demand exceeded its year-ago level,” it said.

The Panglinan-led firm said that charges from power supply agreements (PSAs) also increased by P0.1044/kWh as there were no more Force Majeure (FM) claims for September supply, with the rise in demand. 

“FM claims in the preceding month amounted to P463 million,” Meralco said.

On the other hand, purchases from Independent Power Producers (IPPs) decreased by P0.0174/kWh mainly due to higher average plant dispatch.

WESM, PSAs, and IPPs accounted for 19%, 47% and 34% of Meralco’s energy requirements, respectively.

Other charges

Meanwhile, transmission charge, taxes, and other charges for residential customers registered a slight reduction of P0.0161/kWh.

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

The company said its distribution, supply, and metering charges, meanwhile, have remained unchanged for 63 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 (National Grid Corp. of the Philippines). Taxes and other public policy charges like the Universal Charges and the FIT-All are remitted to the government,” it said. — RSJ, GMA News