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Refund tempers slight May power rate hike




Manila Electric Company’s (Meralco) Distribution Rate True-Up refund tempered the slight upward power adjustment this June as the overall rate for a typical household increased by P0.0798 per kWh, from last month’s P8.5920 to P8.6718 per kWh, mainly as a result of higher charges in the Wholesale Electricity Spot Market (WESM).

The adjustment is equivalent to an increase of around P16 in the total bill of a residential customer consuming 200 kWh. However, this month’s overall rate is still lower than last year’s rate by P0.0534 per kWh. This is also the lowest rate for June since 2018.

Meralco said, “The ERC (Energy Regulatory Commission) provisionally approved Meralco’s proposal to refund around P13.9 billion over 24 months or until the amount is fully refunded. This amount represents the difference between the Actual Weighted Average Tariff and the ERC-approved Interim Average Rate for distribution-related charges from July 2015 to November 2020. The refund rate is P0.2761 per kWh for residential customers and appears in customer bills as a line item called “Dist True-Up.”

Generation charge for June is at P4.6171 per kWh, a slight P0.0697 per kWh increase from last month’s P4.5474 per kWh.

WESM charges increased by P1.6322 per kWh due to tight supply conditions in the Luzon grid. With the increase in temperature and economic activity, demand in the grid increased by 1,131 MW from 10,425 MW in April to 11,556 MW in May. The Luzon grid was placed on Yellow Alert on 5 May due to insufficient operating reserves as the average capacity on outage remained at the 3,000 MW level. In the same period last year, capacity on outage was around 2,700 MW. As a result, WESM prices were persistently high for extended periods, triggering the imposition of the secondary price cap on May 4-7 and then again on 20-22.

The increase in WESM charges was mitigated by the lower charges from the Power Supply Agreements (PSAs) and Independent Power Producers (IPPs), which decreased by P0.0476 per kWh and P0.0037 per kWh, respectively, due to improved average plant dispatch and Peso appreciation.

PSAs and IPPs provided 52% and 42% of MERALCO’s energy requirement this month, respectively. Meanwhile, the share of WESM further declined to 6%.

Transmission charges, taxes, and other charges for residential customers also registered a slight increase of P0.0101 per kWh.

Meanwhile, the Universal Charge-Environmental Charge collection amounting to P0.0025 per kWh remains suspended, as directed by the ERC.

Meralco’s distribution, supply, and metering charges have remained unchanged for 71 months after these registered reductions in July 2015. MERALCO reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while revenue for the transmission charge goes to the NGCP. Taxes and other public policy charges like the Universal Charges and the FIT-All are remitted to the government.