Meralco rates up in March on higher generation cost
BY LENIE LECTURA – MARCH 10, 2022
from Business Mirror
Electricity rates this month will go up slightly by P0.0625 to P9.6467 per kilowatt hour (kWh) from last month’s P9.5842 per kWh mainly due to higher generation charge recorded in the February supply month, the Manila Electric Co. (Meralco) said Thursday.
The March rate adjustment is equivalent to an increase of around P13 in the total bill of a residential customer consuming 200 kWh.
Generation charge, which makes up bulk of an electric bill, went up by P0.2780 to P5.4737 this month from the P5.1957 per kWh registered the previous month, mainly due to higher charges from the Wholesale Electricity Spot Market (WESM).
WESM prices shot up in February and the secondary price cap was imposed 5.63 percent of the time. With the increase in demand and the scheduled maintenance outage of Quezon Power and First Gas-San Lorenzo plants, Meralco sourced additional supply from the WESM last month. As a result, WESM charges increased by P13.4211 per kWh.
Charges from independent power producers (IPPs) also rose by P0.1625 per kWh mainly due to the lower dispatch of Quezon Power and First Gas-San Lorenzo. Quezon Power is on scheduled maintenance outage since February 5, while First Gas-San Lorenzo Modules 60 and 50 are on maintenance outage since January 20 and February 14, respectively. These maintenance shutdowns were performed to ensure the availability of their supply during the hot dry season and the election period.
Peso depreciation against the US dollar also contributed to the increase in IPP costs, since around 97 percent of these costs are dollar-denominated.
Charges from power supply agreements (PSAs) were higher by P0.1510 per kWh, as the dispatch of First NatGas-San Gabriel plant continued to be affected by Malampaya facility’s inability to supply sufficient natural gas. Lower excess energy deliveries, which are priced at a discount, also contributed to the increase in PSA costs. During the supply month, WESM, IPPs and PSAs accounted for 13.9 percent, 32.7 percent, and 53.4 percent, respectively, of Meralco’s energy requirement.
Meralco said this month’s generation charge increase would have been significantly higher if not for the implementation of an additional Distribution Rate True-Up refund.
To recall, Meralco’s proposal to refund around P13.9 billion distribution-related charges was approved by the Energy Regulatory Commission (ERC) in early 2021. This is equivalent to a rate refund of P0.2761 per kWh for residential customers, implemented beginning March 2021.
Then on March 7, Meralco received an ERC order dated February 23, 2022 expanding the coverage of the refund to include the December 2020 to December 2021 period—amounting to an additional P4.8 billion. For residential customers, the refund is equivalent to another P0.1923 per kWh that will be implemented over a period of 12 months.
Residential customers will see a total of P0.4684 per kWh refund under line item called “Dist True-Up” in their bills this month.
Aside from the refund, some Meralco suppliers deferred the collection of portions of their generation costs. These deferred charges will subsequently be billed on a staggered basis over the next three months as directed by the ERC.
Meralco utility economics head Lawrence Fernandez said the total deferred amount is P500 million. This is equivalent to P0.18 per kWh which will be collected in three installments starting next month.
“The deferred P500 million will be recovered over three months for six centavos per kWh for the months of April, May and June,” said Fernandez.
The refund and deferred collection kept Meralco rates “somewhat manageable,” said Meralco spokesperson Joe Zaldarriaga. “While there was a slight upward adjustment of six centavos, these two factors somehow mitigated overall rate increase,” which could have been a total adjustment of around 44 centavos per kWh for this month.
Other charges
Meanwhile, transmission charge, taxes, and other charges for residential customers registered a net decrease by P0.0232 per kWh. The collection of the Universal Charge-Environmental Charge amounting to P0.0025 per kWh remains suspended, as directed by the ERC.
Meralco reiterated that it does not earn from the pass-through charges from generation and transmission, as payments go to the power suppliers and the system operator, respectively, while taxes, universal charges, and Feed-in Tariff Allowance are remitted to the government.
Distribution, supply, and metering charges, which are the only costs that go to Meralco, have remained unchanged since its reduction in July 2015. In the succeeding months, Meralco expects that the continuing increase on global fuel prices would have a significant impact on power rates, particularly on the generation charge, and urges its customers to be extra efficient when using electricity.
Meralco warned that the increase in global fuel prices would have a significant impact on power rates, particularly on the generation charge, in the succeeding months. It did not say how much since it has yet to receive actual billing from its power suppliers. It strongly urged its customers to be “extra efficient” when using electricity.
The company advises its customers to know how much their gadgets and appliances consume through the Appliance Calculator in the Meralco Mobile App as this will help them manage their monthly budget better.
Customers can also save on energy consumption when energy efficiency practices are done right. Keep the airconditioning unit (ACU) on when leaving the house for a quick one-hour errand. This is 17 percent more cost-efficient because by turning it off, the ACU compressor works harder to cool the room again leading to an increase in consumption.
