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Meralco power rates slightly up in July

Manila Electric Co. (Meralco) on Friday announced a slight upward adjustment in its electricity rates in July on the back of the continued increase in the cost of power sourced from the Wholesale Electricity Spot Market (WESM).

This is the fourth straight month that Meralco hiked its rates.

In an advisory, the power distributor said it is increasing its household rate by P0.2353 per kilowatt-hour (/kWh), bringing the overall rate for the month to P8.9071/kWh from P8.6718/kWh in June.

The upward adjustment translated to an increase of around P47 in the total bill of a residential customer consuming 200 kWh.

The power rate hike was “mainly a result of persistently high charges in the Wholesale Electricity Spot Market (WESM).”

Nonetheless, Meralco said July’s rate increase was tempered by the continued implementation of the Distribution Rate True-Up refund, which began in March.

The Energy Regulatory Commission provisionally approved the power distributor’s proposal to refund around P13.9 billion over a period of 24 months or until the amount is fully refunded.

The 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/kWh and appears in customer bills as a line item called “Dist True-Up.”

Meanwhile, generation charge for July is at P4.8707/kWh, a P0.2536 increase from last month’s P4.6171/kWh.

Meralco said WESM charges remained high at P8.7424/kWh “due to tight supply conditions in the Luzon grid, aggravated by the ongoing Malampaya natural gas supply restriction.”

To recall, the Luzon grid was placed on Red Alert from May 31 to June 2 and on Yellow Alert on June 4 amid the unplanned shutdown of power plants, which shaved off as much as 4,000 megawatts (MW) of power from the grid.

In addition, 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,” Meralco said.

Charges from independent power producers (IPPs) also increased by P0.1929/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 brown outsIPP charges were also pushed up by the peso’s depreciation, as dollar-denominated charges account for 97% of IPP costs,” Meralco said.

Cost of power from power supply agreements (PSAs), on the other hand, decreased by P0.0521/kWh.

Meralco said WESM, IPPs, and PSAs provided 7.8%, 39.5%, and 52.7% of its energy requirement this month, respectively.

Transmission charge for residential customers registered a reduction of P0.1463/kWh due to a significant decrease in Ancillary Service charges.

Taxes and other charges registered an increase of P0.1280/kWh.

Meanwhile, collection of the Universal Charge-Environmental Charge remains suspended, as directed by the ERC.

Meralco said its distribution, supply, and metering charges have remained unchanged for 72 months, after these registered reductions in July 2015.

The company 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 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. --KBK, GMA News