June Meralco rates jump amid higher generation charge
By Sheldeen Joy Talavera – June 14, 2024 | 12:33 am
from Business World
A lineman repairs a broken wire on an electric post in Manila, April 4, 2024. — PHILIPPINE STAR/RYAN BALDEMOR
TYPICAL HOUSEHOLDS in areas served by Manila Electric Co. (Meralco) will have to pay higher electricity bills this month, even as the utility deferred the collection of a portion of generation costs.
Meralco in a statement on Thursday said the overall rate will increase by P0.6436 per kilowatt-hour (kWh) to P12.0575 per kWh in June from P11.4139 per kWh in May.
“Driving this month’s overall rate increase is the generation charge which went up by P0.3466 per kWh mainly due to higher costs from the Wholesale Electricity Spot Market (WESM),” the power distributor said.
Residential customers consuming 200 kWh will see their monthly electricity bill go up by around P129 this month.
Meanwhile, households consuming 300 kWh, 400 kWh, and 500 kWh will see their monthly bills increase by P193, P257, and P322, respectively.
“The increase in the generation charge this month would have been higher but Meralco took the initiative to cushion the impact of the higher pass-through costs to our customers with the help from some of our suppliers which deferred the collection of portions of their generation costs,” Meralco Senior Vice-President and Head of Regulatory Management Office Atty. Jose Ronald V. Valles said.
This move allowed this month’s generation charge to go down by P0.1313 per kWh.
At a briefing, Joe R. Zaldarriaga, Meralco’s vice-president and head of corporate communications, said that the company sent a letter to the Energy Regulatory Commission (ERC) on June 5 to propose the deferral of the collection of around P300 million in generation charges from suppliers Quezon Power (Philippines) Ltd., San Buenaventura Power Ltd. (SBPL), and South Premiere Power Corp. (SPPC).
Meralco will also defer the collection of around P200 million in generation costs.
Mr. Zaldarriaga said the total of P500 million will be collected without interest over the July-to-September 2024 billing period.
“We are still waiting for regulatory approval of our 400-MW (megawatt) interim power supply agreement (PSA) with Limay Power, Inc. which could significantly reduce our WESM exposure and generation costs,” Mr. Valles said.
Among the generation components, WESM charges increased by P1.5203 per kWh due to tight supply conditions in May as average demand rose by more than 1,200 MW.
From January to May, the Luzon power grid was placed on red and yellow alerts for 12 and 27 days, respectively.
Charges from independent power producers (IPPs) went up by P0.0224 per kWh in May due to lower average IPP dispatch, as well as the peso depreciation that affected around 98% of IPP costs that were dollar denominated.
In May, the peso sank to the P58 level against the US dollar for the first time since November 2022.
Meanwhile, charges from PSAs fell by P0.2988 per kWh “following deferral of portion of generation costs and lower fuel costs of SPPC covered by its 2024 emergency PSA and SBPL.”
WESM, IPPs, and PSAs accounted for 33%, 29%, and 38% of Meralco’s total energy requirement for the period.
Transmission charges, on the other hand, went up by P0.145 per kWh due to higher ancillary charges following the partial settlement of the 30% of the amount from all WESM transactions in the March supply period, as ordered by the ERC.
In March, the ERC ordered the suspension of the billing and settlement of reserve market spot quantities due to the observed significant increases.
The ERC also approved the implementation of a new feed-in tariff allowance (FIT-All) rate of P0.0838 per kWh starting this month. This is P0.0474 per kWh higher than the previous rate of P0.0364 per kWh.
The FIT-All is a charge reflected in the bills of consumers that is collected from on-grid customers to support the development and promotion of renewable energy.
Taxes and other charges increased by P0.1046 per kWh.
“Pass-through charges for generation and transmission are paid to the power suppliers and the grid operator, respectively, while taxes, universal charges, and FIT-All are all remitted to the government,” Meralco said.
Distribution charges have been unchanged since August 2022 at P0.0360 per kWh.
“Based on historical data and what we actually see on the ground at this time, I think, and I hope the worst is over as far as the surge in demand is concerned. You can already see more or less the change in the climate, albeit it is still warm from time to time,” Mr. Zaldarriaga said.
ERC ORDER
Meanwhile, the ERC on Thursday said it approved distribution utilities’ (DU) staggered payment of their WESM purchases over a four-month period, starting with bills payable in June.
“As the ERC is set to issue an order to the Independent Electricity Market Operator of the Philippines (IEMOP) and the DUs to immediately implement the payment scheme, the Commission will also direct the IEMOP not to impose penalties on DUs as a result of the said arrangement,” the ERC said in a statement.
The regulator said this will alleviate the impact of the higher generation rates “particularly for consumers of DUs with high WESM exposure.”
Citing Article 32 of the Magna Carta for Residential Electricity Consumers, the ERC said that DUs can offer alternative payment options to consumers.
Sought for comment, Meralco’s Mr. Zaldarriaga said the company will wait for the ERC’s final order to determine its next step.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls.
