Meralco expects big rate hike

by Alena Mae S. Flores – February 08, 2017 at 10:04 pm

from Manila Standard Today

Power consumers can expect a “significant increase” in generation charges this month from an all-time low in January, because of the maintenance shutdown of several plants and higher fuel costs, Manila Electric Co. said Wednesday.

“Coming from a record low in January, we expect  a significant increase in the generation charge due to normalization of capacity fees for Pagbilao and Ilijan [power plants], lower dispatch of plants that went on maintenance [Calaca, Masinloc and First Gas-Sta. Rita] and higher fuel costs,” Meralco senior vice president and head of utility economics Lawrence Fernandez said.

Fernandez did not give specific details on the impending increase. Meralco will release the final figures Friday.

“We also anticipate higher transmission charges, with the recent approval of the higher MAR [maximum allowable revenue] for NGCP [National Grid Corp. of the Philippines],” he said.

Meralco spokesman Joe Zaldarriaga said the generation charge was expected to normalize from January when it hit an all-time low.

“If you will recall, generation costs were comparable to October 2004 rates while overall costs were approximate to that of October 2009. There was also a reduction then in the capacity fees of Pagbilao and Ilijan as a result of the annual reconciliation of outage allowances. This significant reduction will no longer be present in the February generation charge,” Zaldarriaga said.

He said fuel prices, dispatch levels and foreign exchange would also have an impact on generation charges.

Meralco announced in January that rates for households declined by P0.2703 per kilowatt-hour, bringing it down to P8.09 per kilowatt-hour, the lowest since October 2009.

Meralco attributed the lower rates last month to the decline in generation charge by P0.2351 per kWh to P3.9351 per kWh in December.

“The decrease resulted from the P0.59 per kWh decrease in the cost of power supplied by PSA [power supply agreement] plants, mainly due to lower capacity charges of Pagbilao and Ilijan. This reduction in capacity fees is due to the annual reconciliation of outage allowances that is done at the end of each year under the contracts approved by the Energy Regulatory Commission. The capacity fees from these suppliers will normalize in the following month,” Meralco said earlier.