Meralco electricity rates up in May

Manila Electric Co. (Meralco) customers should expect a slight adjustment in their electricity bills due to a 46 centavos increase in power cost this month — bringing the overall rates to P11.41 per kilowatt-hour (kWH) from P10.95 per kWh in April. 

Meralco said on Tuesday that the adjustment, primarily driven by a spike in generation charges, translates to an increase in the amount of P92 in the total electricity bills of residential households consuming 200 kWh. 

Based on Meralco's data, the generation charge went up by around 45 centavos per kWh due to higher costs from the Wholesale Electricity Spot Market (WESM) and Power Supply Agreements (PSAs).

Charges from WESM inched up by P1.79 per kWh due to the tight supply condition in the Luzon grid during the April supply month as demand spiked to 2,401 megawatts.

There were three days with Yellow Alerts and five days with both Yellow and Red Alerts from normal conditions the previous supply month. Thus, the secondary price cap was triggered 19 percent of the time in April against only 7 percent the previous month.

Similarly, charges from PSAs increased by roughly 29 centavos per kWh due to lower excess energy deliveries of some PSAs, which were priced at a discount, and charges from an emergency PSA that covered Meralco's supply requirements while awaiting regulatory approval of PSAs under Competitive Selection Process (CSPs). 

Meralco was also affected by the peso depreciation since 14 percent of its PSA costs were dollar-denominated; therefore contributing to the increase.

Notably, the 69 centavos per kWh reduction in charges from Independent Power Producers (IPPs) due to higher average IPP dispatch and lower fuel prices helped temper the generation charge increase.

WESM, PSAs, and IPPs accounted for 30 percent, 36 percent, and 34 percent, respectively of Meralco's total energy requirement for the period.

On the other hand, the transmission charge, taxes, and other charges also registered a net increase of 1.66 centavos per kWh.

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.

Meralco reiterated that its distribution charge remained unchanged since the 3.6 centavos per kWh reduction for a typical residential customer since August 2022.