Customers of the Manila Electric Co. (Meralco), the country’s biggest power distributor, can expect higher electricity bills in October, mainly because of an increase in the generation charge by an average 14.19 centavos per kilowatt hour (kWh).
This means that households consuming 100 kWh a month will have to pay P14.19 more, while those using 200 kWh a month will experience a P28.38 increase in their October billing.
Households consuming 300 kWh and 400 kWh monthly will have to pay an additional P42.57 and P56.76, respectively.
The generation charge, which is the biggest component of the electricity bill, averages about 60 percent of the electricity consumer’s average monthly power bill.
The increases in the October billing will, however, be partly mitigated by a 5-centavo per kWh reduction in the distribution, metering and supply charges, Meralco said.
Mitigating reductions
Meralco said it was ordered by the state regulator, the Energy Regulatory Commission (ERC), to reduce its distribution, supply and metering charges to P1.60 per kWh from the current P1.64 per kWh, starting with the October 2011 billing month.
The directive was contained in the ERC’s Oct. 6 order granting Meralco the provisional authority to implement the new rates for the first year (July 2011 to June 2012) of the third regulatory period under the performance-based rate (PBR) mechanism.
Households consuming 50 kWh will pay P7.57 less for distribution, supply and metering charges starting this month, while households using up 70, 100 and 200 kWh will see reductions of P9.35, P12.02 and P20.92, respectively.
“The reduction in the [distribution, supply and metering charges] effectively mitigated the adjustment in the generation charge for the October billing month,” said Ivanna de la Peña, Meralco first vice president and head of regulatory management.
De la Peña explained that the reduced distribution, supply and metering charges will be in effect until June 2012 at least, while the changes in the generation charge will still be done on a monthly basis.
WESM, IPPs prices up
According to Meralco, the increase in the generation charge this month was caused by the higher costs of the electricity it bought from two of its main sources—the wholesale electricity spot market (WESM), and from three independent power producers (IPPs).
The IPPs from which Meralco sources its electricity are the Quezon Power Phil. coal-fired facility, and the 1,000-megawatt Sta. Rita and 500-MW San Lorenzo natural gas-fired power plants. The latter two are owned by First Gas Holdings of the Lopez Group, which holds a 6.6-percent interest in Meralco.
A third source of electricity for Meralco is the state-owned National Power Corp. (Napocor) which actually reduced the cost of its power by 33 centavos per kWh. However, this was not enough to offset the increases in the prices of the IPPs and the WESM, Meralco said.
For the September supply month, Meralco sourced 48 percent of its electricity requirements from the IPPs, 45 percent from Napocor, and only 7 percent from the WESM.
The average increase in the IPP rates was 31.6 centavos per kWh, while the WESM increased the cost of its power by 11 centavos per kWh.
According to Meralco, the increase in First Gas’ fuel costs was caused by its having to use more expensive liquid fuel because of a supply restriction from the Malampaya gas field between Sept. 22 and Sept. 25.
Also contributing to the increase in the generation charge was the slightly lower power output of Quezon Power and Sta Rita natural gas facility, as well as the depreciation of the peso against the United States dollar, it said.
Meralco again stressed that the generation charge is entirely a pass-through charge and does not go to Meralco but to its power suppliers.
The cost of electricity sold by the generating companies could move from month to month based on many factors, among them fuel prices, the dispatch of the IPPs, the foreign exchange rate and WESM prices, Meralco explained.