Meralco explains power rate hike, assures sufficient supply this summer

Meralco vice president and head of Corporate Communications Joe Zaldarriaga clarified the factors behind the recent increase in electricity rates and assured consumers that power supply remains stable heading into the summer months.

In an interview on DZRH, Zaldarriaga announced that electricity rates will increase by P0.26 per kilowatt-hour (kWh), translating to an additional P53 for a typical household consuming 200 kWh. He attributed the hike to three key factors:

First, the completion of a one-time refund related to rate reset costs, which previously reduced charges by P0.23 per kWh but has now ended. Second, a significant increase of P0.13 per kWh in transmission charges paid by Meralco to the National Grid Corporation of the Philippines (NGCP) due to auxiliary service charges. Third, a P0.035 per kWh increase in the feed-in tariff allowance, which is remitted to the National Transmission Corporation (TransCo) to support renewable energy developers.

Despite these increases, Zaldarriaga noted that generation charges have decreased, helping to mitigate the impact on consumers. He also emphasized that Meralco itself has not increased its distribution charge, which has remained at an average of P1.35 per kWh for the past decade, even seeing a reduction of P0.036 per kWh in August 2022.

"The biggest component of our electricity bill is the generation charge, followed by transmission, other charges, and taxes," Zaldarriaga explained.

"Since Meralco is at the end of the supply chain, we are often the ones explaining the price increases even though we do not directly benefit from them."

Meralco has also filed a petition for an annual weighted average tariff adjustment, which includes a P19-billion refund for customers. If approved, the refund could impact rates as early as April.

Power supply assured for summer

Zaldarriaga reassured customers that Meralco has prepared for the summer’s peak demand, ensuring sufficient power supply as long as there are no unexpected plant outages.

"The government has given its assurance, so I don't see any problems moving forward," he said. However, he acknowledged that unplanned power plant shutdowns remain a major concern.

To address potential supply gaps, Meralco has activated its Interruptible Load Program (ILP), which allows large customers to run their own generators instead of drawing power from the grid. This frees up electricity for residential and smaller business customers.