Meralco: Dec rates to rise on higher generation cost

BY BUSINESSMIRROR – DECEMBER 6, 2021

Electricity rates this month could go up due to higher generation charge, the Manila Electric Co. (Meralco) said over the weekend.

Power firms that supply Meralco’s requirement have yet to send their final billings to the utility firm. Nonetheless, initial indications showed there could be an increase in generation charge for the December bill. Generation charge is a major component of a power bill.

“The prevailing high coal prices in the world market and the continued use of more expensive alternative fuel with the persisting Malampaya gas supply restriction are expected to raise the fuel costs for this billing period,” said Meralco utility economics head Lawrence Fernandez said.

The increase for the December bill, he added, will also include one-fourth, or around 13 centavos, of the deferred generation costs from the November bill, as directed by the Energy Regulatory Commission (ERC).

The generation charge last month went up by around 29-centavos/kWh. This would have been higher, at around 81-centavos/kWh, but a portion of the increase will instead be deferred to the next four months. Meralco said it took the initiative to cushion the impact in the bills of its customers.

“The difference of 52-centavos per kWh will be amortized and added to the December, January, February and March bills at a rate of around 13-centavos per kWh, or 52-centavos divided by four,” Fernandez said.

Meralco said it coordinated with some of its suppliers to defer collection of portions of their generation costs. These deferred charges will subsequently be billed on a staggered basis over the next four months as directed by ERC.

November power rates rose by P0.3256 per kWh to P9.4630 per kWh in November from P9.1374  per kWh in October.

The Malampaya shutdown from October 2 to 25 led to an increase in generation charge, a major component of an electricity bill.

The November generation charge went up by P0.2911 per kWh to P5.3346 per kWh from P5.0435 per kWh the previous month.

Meralco said the Malampaya facility maintenance shutdown led to a reduction in available supply in the Wholesale Electricity Spot Market (WESM). The tight supply condition in the Luzon Grid led to higher WESM prices at P1.7073 per kWh and triggered the WESM secondary price cap on September 30, October 1, October 21, 22.

The Luzon grid was also placed on Yellow Alert on October 20 due to forced outages of several power plants.

Charges from Independent Power Producers (IPPs) also increased by P0.8186 per kWh.

Charges from Power Supply Agreements (PSAs) went down by P0.2841 per kWh mainly due to higher excess energy deliveries.

WESM, IPPs and PSAs accounted for 13.9, 37.4, and 48.7 percent, respectively, of Meralco’s energy requirement.