By Alena Mae S. Flores – February 08, 2018 at 07:39 pm

Power retailer Manila Electric Co. said Thursday it will not fully implement the estimated P1.08-per-kilowatt-hour power rate increase for a typical household in February to mitigate the impact on customers.

Meralco said in a statement the overall adjustment this month was mainly due to the P0.85-per-kWh increase in power generation charges, which reflected the return to previous levels of the capacity fees of suppliers under power supply agreements.

The power firm said the higher fuel costs and the depreciation of the peso against major currencies also contributed to the higher generation charges.

“This will not be implemented in full, in the interest of consumer welfare,” the country’s biggest power distributor said. A typical household consumes an average of 200 kilowatt-hours a month.

Meralco spokesman Joe Zaldarriaga said the company would not implement the full impact of the rate adjustment in the interest of consumer welfare “and cognizant of the fact that there were recent price increases on fuel and other basic commodities.”

Meralco said its distribution charge had remained unchanged for 31 months, after a reduction in July 2015.

“The rate increase, the biggest of which goes to the  generation charge is paid in full to the power suppliers who operate their power plants. These power plants use  fuel like natural gas from Malampaya and coal in generating electricity,” it said.

Meralco said there was also a P0.27/kWh increase in taxes and other charges, reflecting the value added tax on transmission, equivalent to around P0.05/kWh, as provided for in the Tax Reform for Acceleration and Inclusion law.

The higher generation cost was offset by a P0.04/kWh reduction in the transmission charge.

Meralco advised the public to await the official announcement on the final rate adjustment in February “and how the remainder of the increase will be implemented.”

The February increase followed two consecutive months of power rate reduction in overall electricity rates totaling P0.90 per kWh for a typical household.

Meralco earlier warned that its power rates would go up this month due to the normalization of the capacity fees.

“We may recall that the January generation charge reduction was largely due to lower capacity fees following the annual reconciliation of outage allowances. As in prior years, we expect capacity fees of PSAs to normalize in February,” Meralco head of utility economics Lawrence Fernandez said earlier.

“Hence, we see an uptick in the gen charge next month, though we still need to await final supplier bills to see the effect of such factors as WESM [Wholesale Electricity Spot Market] charges, forex [foreign exchange] rate, fuel prices and others,” he said.

Meralco earlier said power rates would also likely go up by as much as P0.08 per kilowatt-hour in February given the impact of the Tax Reform for Acceleration and Inclusion law, particularly the lifting of the tax exemption of the National Grid Corp. of the Philippines and higher excise tax on coal.

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