Meralco hikes household rate by 72 centavos in April 2025

Customers of the Manila Electric Company (Meralco) should brace for higher electricity bills this month as the power distributor implements another round of hike in its household rate.

In an advisory, Meralco announced it is adjusting upward its power rate by 72 centavos per kilowatt-hour (kWh) for April amid significant jump in generation costs.

In particular, the power distributor's overall rate will go up by P0.7226 per kWh, bringing the household rate to P13.0127 per kWh from P12.2901 per kWh in March.

The power rate hike could translate to about a P144 increase in the monthly bill of a typical customer consuming 200 kWh.

Meralco said the generation charge drove the overall rate hike as it surged by P0.7278 per kWh, mainly on the back of higher costs from the Wholesale Electricity Spot Market (WESM).

This, as WESM charges rose by P3.4205 per kWh due to the tighter supply conditions in the Luzon grid during the March supply month.

Average and peak demand increased by 816 megawatts (MW) and 1,123 MW, respectively, while average capacity on outage was also higher by 979 MW.

Meralco cited the hoisting of a yellow alert on the Luzon grid last March 5, which triggered the secondary price cap at 6.39% at that time, “indicating persistently high spot market prices during the period.”

Meanwhile, the power distributor said charges from Power Supply Agreements (PSAs) also increased by P0.2811 per kWh following the expiration of the 400 MW PSA with Limay Power Inc. last February 25.

The company said the increases in WESM and PSA charges were partly tempered by lower charges from Independent Power Producers (IPPs), which went down by P0.4738 per kWh due to the appreciation of the peso against the US dollar since around 97% of IPP costs were dollar-denominated.

Meralco said WESM, PSAs, and IPPs accounted for 23%, 44%, and 33%, respectively, of its total energy requirement for the period. 

The power distribution utility added that the overall power rate hike was also brought about by the rise in transmission charge for residential customers by P0.0809 per kWh due to higher ancillary service charges from the reserve market incurred by the National Grid Corporation of the Philippines (NGCP). 

“This month’s transmission charge also includes the last of three installments of February and March 2024 reserve market transactions for Luzon that the Energy Regulatory Commission (ERC) directed NGCP to collect,” Meralco said.

Other charges, including taxes, also registered a net increase of P0.1163 per kWh, according to the company.

Meralco explained that pass-through charges for generation and transmission are paid by Meralco to the power suppliers and the grid operator, respectively, while taxes, universal charges, and Feed-in Tariff Allowance are all remitted to the government. 

The distribution charge, on the other hand, has not been adjusted since the P0.0360 per kWh reduction for a typical residential household, which began in August 2022, according to the power distributor.

“Helping mitigate the overall increase was the implementation of the distribution rate true-up adjustment, equivalent to P0.2024 per kWh for residential customers, beginning this April billing period,” Meralco said.

The company explained that the adjustment is pursuant to the order of the Energy Regulatory Commission dated March 5, 2025, provisionally approving the refund amount of P19.9 billion.

“This covers the difference between Meralco’s Actual Weighted Average Tariff (AWAT) and the latest approved distribution rate for the period July 2022 to December 2024,” it said.

“This refund shall be for 36 months or until such time that the amount is fully refunded,” it added. —AOL/ VAL, GMA Integrated News