Manila Electric Co. (Meralco) customers are set to face higher electricity rates this November as a result of increased generation charges.

During a press briefing on Monday, Meralco vice president and head of Corporate Communications Joe R. Zaldarriaga announced that the overall electricity rate rose by 42 centavos per kilowatt-hour (kWh), bringing it to P11.86 per kWh from the previous month’s P11.43 per kWh.

For residential customers consuming 200 kWh, this increase translates to an additional P85 in their total electricity bill this month.

Primary driver

The primary driver of the rate hike is the 29 centavos per kWh increase in the generation charge.

Charges from Independent Power Producers (IPPs) rose by 94 centavos per kWh, largely due to the depreciation of the Philippine Peso, which weakened by P2 against the US Dollar.

This depreciation affected 98 percent of IPP costs, which are dollar-denominated. Similarly, Power Supply Agreements (PSAs) saw an increase of 43 centavos per kWh, with 49 percent of their costs tied to the US Dollar.

Additional expenses, including payments for liquefied natural gas (LNG) terminal fees for the First Gas Sta. Rita and San Lorenzo power plants also contributed to the higher IPP charges.

WESM charges

Charges from the Wholesale Electricity Spot Market (WESM) increased by 1 centavo per kWh. This slight rise was attributed to higher average demand in the Luzon grid, which went up by 198 megawatts, and an increase in average capacity on outage by 179 megawatts.

During this period, Meralco’s total energy requirements were sourced from IPPs, PSAs and WESM, which accounted for 24 percent, 47 percent and 29 percent, respectively.

Adding to the overall increase was the seven centavos per kWh rise in the transmission charge, driven by higher ancillary service charges from the WESM Reserve Market.