Meralco rate hike in April biggest so far this year

INQUIRER FILE PHOTO

MANILA, Philippines — Customers of Manila Electric Co. (Meralco) will pay an additional 53.63 centavos per kilowatt-hour (kWh) this month—the biggest increase so far this year—as a result of the higher cost of electricity the distributor buys from its suppliers.

This will translate to an increase of P102 in the total bill of a household consuming 200 kWh a month.

Since January, Meralco rates have gone up by 59.88 centavos per kWh. Meralco rates went down by 7.46 centavos per kWh in January and by another 12 centavos in February before increasing by 6.25 centavos in March.

At a briefing on Monday, Joe Zaldarriaga, vice president for communications of Meralco, said the increase was driven by higher charges from Meralco’s two power sources—independent power producers (IPPs) and the Wholesale Electricity Spot Market (WESM).

For this month, the generation charge went up by 39.87 centavos to P5.8724 per kWh from the previous month’s P5.4737.

Charges from IPPs, which are private companies that generate electricity for sale to the national electricity network, rose by P1.4885 per kWh due to the tighter supply caused by the scheduled maintenance of the Quezon Power Plant that lasted until March 24.

The depreciation of the peso against the US dollar also contributed to the increase in IPP charges since 97 percent of these costs are dollar-denominated.

WESM prices also remained high in March due to tight supply conditions in the Luzon grid.

As the country is now in the dry season and economic activity in the country started to rebound with the easing of COVID-19 quarantine restrictions, power demand in Luzon rose by more than 1,500 megawatts.

This tight supply was also the reason why Meralco had to buy additional supply from WESM, which is the marketplace tapped by utility providers that need to augment their primary source of electricity.

Due to the Malampaya facility’s continued failure to supply sufficient natural gas, the First Gas-Sta. Rita power plant also had to use more expensive liquid fuel, which in turn affected Meralco rates.

According to Jose Ronald Valles, head of Meralco’s Regulatory Management Office, this month’s increase in the generation charge would have been significantly bigger if the payment for a part of the generation costs were not deferred.

Staggered payment

On top of the deferred generation charges, the Energy Regulatory Commission (ERC) also directed Meralco to postpone the collection of P300 million in generation costs, which further reduced this month’s generation rate by about 11 centavos per kWh, Valles added.

As ordered by the ERC, all these charges would be subsequently billed on a staggered basis over the next three months.

Meralco’s refund of P18.7 billion in distribution-related charges is also expected to help temper this month’s increase. This is equivalent to a total refund of 46.84 centavos per kWh for residential customers.

As Election Day draws near, Meralco also assured the public that it was ready to address any electricity-related problem that might occur in any of the more than 2,900 polling and canvassing centers and vital election sites within its franchise area.

The power utility giant already inspected and conducted maintenance work on its distribution utilities, while Meralco crew and contractors, along with generator sets and floodlights, will be deployed in strategic locations across its franchise.

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