Meralco rates climb for 3rd month

Customers of Manila Electric Company (Meralco) should brace for higher electricity bills this April, as the utility announced a rate hike of P0.72 per kilowatt-hour (kWh), bringing the overall rate to P13.01 per kWh from P12.29 in March.

Meralco Vice President and Head of Corporate Communications Joe R. Zaldarriaga said during a media briefing on Friday that the adjustment, which marks the third straight month of hikes, will translate to about a P145 increase in the monthly bill of a typical household consuming 200 kWh.

The upward adjustment was mainly driven by a P0.73 per kWh increase in the generation charge, caused by higher charges from the Wholesale Electricity Spot Market (WESM).

Spot market prices jumped by P3.42 per kWh due to tight supply conditions in the Luzon grid during March, as average and peak demand rose by 816 megawatts (MW) and 1,123 MW, respectively.

Outages also increased by 979 MW. The grid was placed under Yellow Alert on March 5, with the secondary price cap triggered 6.39 percent of the time.

Charges from Power Supply Agreements (PSAs) also went up by P0.2811 per kWh following the expiration of the 400 MW PSA with Limay Power Inc. on February 25. These increases were partly offset by lower Independent Power Producer (IPP) charges, which fell by P0.47 per kWh due to the peso’s appreciation. About 97 percent of IPP costs were dollar-denominated.

Meralco sourced 44 percent of its power needs from PSAs, 33 percent from IPPs, and 23 percent from WESM during the period.

Transmission charges for residential customers also rose by P0.08 per kWh due to higher ancillary service costs and reserve market transactions of the National Grid Corp. of the Philippines (NGCP), including the final installment for reserve market costs from February and March, as directed by the Energy Regulatory Commission (ERC).

Other charges, including taxes, added another P0.12 per kWh to the rate hike. Pass-through charges for generation and transmission are paid by Meralco to power suppliers and the grid operator, while taxes, universal charges, and the Feed-in Tariff Allowance are remitted to the government.

Meralco's distribution charge remained unchanged, with the last adjustment being a P0.04 per kWh reduction implemented in August 2022.

The overall increase this month was tempered by the start of a P0.20 per kWh distribution-related true-up refund for residential customers.

The ERC provisionally approved the P19.9 billion refund on March 5, covering the difference between Meralco’s Actual Weighted Average Tariff and the approved distribution rate from July 2022 to December 2024. The refund will be spread over 36 months or until fully refunded.

With the midterm elections approaching, Meralco said it has taken steps to ensure reliable electricity service during the polls.

“Historically, Meralco’s franchise area has had no problems during the election period but we have prepared contingency plans in case of isolated power outages to ensure that our facilities are ready to respond to any emergency,” Zaldarriaga said.