Meralco rates to go up slightly by P0.08/kWh this June due to WESM price spikes

By Myrna M. Velasco – June 11, 2021, 2:34 PM
from Manila Bulletin

Customers of Manila Electric Company (Meralco) will have to burden additional P0.0798 per kilowatt hour (kWh) in their June electric bills, and that’s driven mainly by higher charges for supply procured from the Wholesale Electricity Spot Market.

For those in the 200-kWh consumption base, the aggregate cost addition in their bills will be P16, according to the utility firm.

The overall tariff of Meralco climbed slightly to P8.6718 per kWh as against a leaner P8.5920 per kWh on its May billing to customers; although that is still lower by P0.0534 per kWh compared to the rate in the same month last year.

The generation charge, which accounts for the bulk of cost component being passed on by Meralco, had been higher by P0.0697 per kWh to P4.6171 per kWh vis-à-vis last month’s P4.5474 per kWh.

Additionally, the ancillary services component of the transmission charge, as well as taxes and other charges had been marginally up by P0.0101 per kWh last month; while the collection of P0.0025 per kWh universal charge-environmental charge remained suspended as earlier directed by the ERC.

In particular, Meralco noted that charges for supply sourced from the WESM had been higher by P1.6322 per kWh “due to tight supply conditions in the Luzon grid,” expounding that the hotter temperatures and heightened economic re-opening jacked up electricity demand by 1,131 megawatts to 11,556MW in May as against 10,425MW in April.

The country’s main grid had been placed on ‘yellow alert’ last May 5 due to insufficient reserves following the simultaneous forced outages of power plants; and that ignited recurring high clearing prices at the spot market.

“WESM prices were persistently high for extended periods, triggering the imposition of the secondary price cap on May 4-7 and then again on May 20-22,” the power firm has reiterated.

According to Meralco, “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,” and that was mainly attributed to improved plant dispatch of its contracted capacities.

Highest fraction of supply procurement by Meralco last month had been from its PSAs at 52-percent; then its IPPs provided 42-percent of its supply portfolio; while WESM exposure was at a negligible 6.0-percent.

The utility firm, nevertheless, emphasized that the rate spike this month had been tempered by the “continued implementation of the distribution rate true-up refund,” that started in March this year based on the provisional approval granted by the Energy Regulatory Commission.

For residential customers, that refund rate amounted to P0.2761 per kWh cost reduction– and reflected as a separate line item in their electric bills under “distribution true-up” charge.