Meralco March rate up due to transmission charge hike

Contrary to its earlier forecast of a reduction, the Manila Electric Company (Meralco) is slightly increasing its household electricity rate this month as the rise in transmission charge overlapped with the reduction in generation charge.

In an advisory, Meralco said it raised its power rate by 2.29 centavos per kilowatt-hour (kWh) for March, bringing the power distributor’s overall rate to P11.9367 per kWh from P11.9168 in February.

The upward adjustment translates to an increment of nearly P5 in the total bill of residential customers consuming 200 kWh.

To recall, Meralco said Wednesday that its customers might expect a reduction in power rate this month due to lower generation charge.

However, in its official price adjustment advisory, the power distributor said the increase in transmission charge drove the overall rate increase for March.

"Our earlier projection of a lower generation charge would have resulted in lower overall rates. However, the steep upward adjustment in the transmission charge effectively wiped out the reduction in generation charges causing a slight uptick in overall rates,” said Meralco vice president and head of corporate communications Joe Zaldarriaga.

'Wiped out'

Transmission charge, imposed by the National Grid Corporation of the Philippines (NGCP), increased by 39.76 centavos per kWh “due to higher ancillary service charges, which more than tripled this month and now account for around 52% of total transmission costs.”

This effectively “wiped out” the 35.18-centavo per kWh reduction in generation charge.

Meralco said charges from its power supply agreements (PSA) went down by 30.45 centavos per kWh mainly due to lower energy payments for the South Premier Power Corp. (SPPC) emergency PSAs and the resumption of operations of the San Buenaventura Power Ltd. Co. (SBPL) power plant after undergoing scheduled maintenance.

Charges from Independent Power Producers (IPPs), likewise, decreased by 14.43 centavos per kWh, already reflecting deductions of incremental natural gas costs for FGPC–Sta. Rita under its new Gas Sale and Purchase Agreement (GSPA), as directed by the Energy Regulatory Commission.

Meralco said these were equivalent to generation charge reductions of 4.47 centavos per kWh and 8.66 centavos per kWh for the January and February 2024 supply months, respectively.

WESM charges

Charges from the Wholesale Electricity Spot Market (WESM) also went down by 11.31 centavos per kWh as the supply situation improved as average capacity on outage in the Luzon grid decreased by more than 300 megawatts (MW).

The PSAs, IPPs, and WESM accounted for 51%, 27% and 22%, respectively, of Meralco’s total energy requirement for the period.

For other charges, Meralco said a net decrease of 2.29 centavos per kWh was registered.

“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 the Feed-In Tariff Allowance or FIT-All are all remitted to the government,” it said.

Meralco said its distribution charge has not moved since the 3.60-centavo per kWh reduction for a typical residential customer beginning August 2022.

More rate hikes possible

Lawrence Fernandez, Meralco vice president and head of utility economics, said that optimizing its electricity sourcing from various suppliers was part of their day-to-day operations. However, with the approaching summer season and the prevailing El Niño, Meralco warned of possible additional increases in electricity charges, especially as hydroelectric plants' generation is affected.

"'Pag mataas ang demand, normally 'yan magti-trigger 'yan ng higher prices sa spot market (When the demand is high, normally that triggers higher prices in the spot market)," Zaldarriaga said.

This early, however, consumers are already bracing for the pinch of higher electricity rates.

Canteen owner Tatay Benito deals with a monthly consumption of over 400 kWh and a P5,000 electricity bill as he needs to use various appliances for his business.

He expressed concerns about Meralco's announcement of further increases in electricity prices this March, contrary to the firm's statement in February that charges would decrease.

"Pasakit pa rin sa aming mga consumer 'yun bababa tapos mas malaki pa pala 'yung itataas, bale wala 'yung sinasabi nilang ibaba. Tag-init lalong tataas pa uli 'yung mga bill namin," said Benito.

(The rate adjustment is hard on us as consumers. They said it would go down, then it turns out the increase will be bigger. So much for their announcement of lower rates. Our bill will surely go up because of the summer season.)

Meanwhile, Meralco reiterated its call for the public to be prudent and efficient in using electricity as consumption usually increases by 10% to 40% during these times.

The power distributor advised regular cleaning and checking of appliances, setting air conditioners to 25 degrees Celsius, unplugging appliances when not in use, utilizing natural lighting when possible, and using LED lights to save on electricity costs. — RSJ/VDV, GMA Integrated News