Meralco hike due to pricey fuel, peso fall

INQUIRER FILE PHOTO

MANILA, Philippines — Customers billed by Manila Electric Co. (Meralco), the country’s largest power distributor, might need to cut back on some expenses as high fuel costs and the weakening of the peso push up electricity prices.

Meralco announced an increase of P0.3907 per kilowatt-hour (kWh) for September, after reducing electricity rates for two consecutive months.

This brings the overall rate to P9.9365 per kWh from P9.5458 per kWh in August.

For residential customers with monthly consumption of 200 kWh, this is equivalent to an increase of P78.14.

The generation charge, which makes up more than half of Meralco’s power rates, rose by P0.3581 to P6.9393 per kWh from P6.5812 per kWh.

Surge factors

Charges levied by independent power producers (IPP) and power supply agreements (PSAs) inched up by P0.8026 per kWh and P0.3316 per kWh, respectively.

Meralco attributed the surge in the generation charge to higher fuel costs and the peso’s depreciation.

“The ongoing Malampaya gas supply restriction necessitated the increased use of more expensive alternative fuel by First Gas Sta. Rita and San Lorenzo to ensure continuous supply,” it said.

The Malampaya gas-to-power project in offshore Palawan supplies about 20 percent of the country’s electricity requirements.

“Peso depreciation also pushed up charges from the IPPs and PSAs since 98 percent of total IPP costs and 36 percent of PSA costs are dollar-denominated. The continued rise in international coal prices also contributed to the PSA rate increase,” it added.

Lower fees levied by the Wholesale Electricity Spot Market (WESM), the venue for trading electricity as a commodity, slightly mitigated the elevated costs from IPPs and supply deals.

Mitigating mechanism

WESM prices registered a reduction of P3.7473 per kWh as the supply situation in the Luzon grid improved.

Meralco said no “yellow alert” notices were issued last month while the frequency of secondary price cap imposition dropped to 4.7 percent from 27.62 percent in July.

The secondary price cap is a price-mitigating mechanism implemented by WESM’s operator, the Independent Electricity Market Operator of the Philippines, to protect consumers against sustained prices in the power spot market.

Transmission charge for residential customers decreased by P0.0432 per kWh due to lower ancillary service charges.

However, taxes and other charges went up by P0.0758 per kWh, including the additional P0.0239 per kWh to the Universal Charge for Missionary Electrification as recently ordered by the Energy Regulatory Commission.

With this adjustment, universal charges now total P0.2228 per kWh from P0.1989 per kWh previously.

For the period, Meralco procured 48 percent of its energy requirement from PSAs while IPPs and WESM accounted for 42 percent and 10 percent, respectively.

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