Consumers warned of higher electricity bills in months ahead

MANILA, Philippines—Customers of Manila Electric Co. should brace themselves for higher electricity bills starting this month up to July as the expected increase in power consumption during the hot summer months is expected to put pressure on power rates.

The generation charge for the April supply month (which will be reflected in the May billing month) was projected to go up to P7.69 per kilowatt-hour, Lawrence S. Fernandez, assistant vice president and head of utility economics for Meralco, said in a phone interview Friday.

This represented an increase of P2.48 per kWh compared to the P5.21 per kWh generation charge recorded during the February supply month (which was reflected in the March billing month).

The generation charge for the May supply month (to be billed in June) was projected to reach P6.57 per kWh, and for the June supply month (to be billed in July), P7.23 per kWh, Fernandez said.

Meralco has yet to announce the final generation charge for the March supply month (to be reflected in this month’s electricity bill). Indications however point to an  increase in power bills as the higher demand for electricity has put pressure on prices at the wholesale electricity spot market, he said.

Fernandez noted, however, that these projected generation charges could still go down should the Energy Regulatory Commission approve Meralco’s application for three interim power supply agreements.

The country’s biggest distribution utility recently signed power supply agreements that could provide up to 204 megawatts in additional capacity, in a bid to reduce and mitigate Meralco’s exposure to the wholesale electricity spot market (WESM) from April 1 to June 30 this year.

According to Meralco, it signed separate interim agreements with Toledo Power Co. for a supply of up to 28 megawatts, with an option for an additional 9 MW, and with Panay Power Corp., which will provide 27 MW to the power distributor. A similar agreement was executed with 1590 Energy Corp. for the purchase of up to 140 MW in capacity and associated energy output from the 225-MW Bauang Power Plant in La Union.

ERC executive director Francis Saturnino Juan said in a separate telephone interview that the exposure of Meralco to WESM may increase to more than 10 percent of its electricity requirements without the additional capacity coming from the new supply agreements.

It may be recalled that Meralco took a hit when it wanted to impose a P4.15 per kWh rate increase in the generation charge, given the high spot market charges of up to P36.08 per kWh for the billing month of December. The amount was later recalculated as the WESM prices during the  period were deemed unreasonable, irrational and uncompetitive.

According to Fernandez, the approval of Meralco’s three interim power supply agreements would help bring down the generation charge to P7.16 per kWh for the April supply month; P6.23 per kWh for the May supply month; and P6.64 per kWh for June. These figures however, were still higher than the P5.21 per kWh gencharge billed in March.

On a related development, Meralco  announced that it has filed in the ERC an application for new distribution, supply and metering charges.

As provided under t Performance Based Regulation scheme, this application was for the adjustment of Meralco’s Maximum Average Price (MAP) for Regulatory Year 2015, and its rate translation into distribution, supply and metering charges to different customer classes.

According to Meralco, it has sought for a 9.12-centavo per kWh decrease in distribution, supply and metering charges to to P1.5562 per kWh, from the current P1.6474 per kWh.

If approved, the different customer classes will experience around 5 to 6 percent reduction in these charges, Meralco said. For example, a residential customer consuming 200 kWh will have a total of 15-centavo per kWh reduction in its Meralco charges (referring to distribution, supply and metering) to P2.20 per kWh from the current P2.35 per kWh.

Meralco said it hoped to implement the lower charges at the start of its fourth regulatory year this coming July.