Meralco sees P0.52/kWh hike in generation charge

By Myrna M. Velasco – March 8, 2023, 2:18 PM
from Manila Bulletin

Power utility giant Manila Electric Company (Meralco) has estimated P0.52 per kilowatt hour (kWh) hike in its generation charge this March billing; following the Energy Regulatory Commission’s approval of its bid to stagger for two months a portion of its aggregate increase that resulted from the Malampaya gas production facility shutdown in February.

For the next billings in April and May, the deferred fraction of the generation charge as allowed by the ERC will carry over additional adjustments of P0.20 per kWh each month for the specified billing periods.

Meralco explained that the P0.62 per kWh calculation that had been presented to ERC is inclusive of value added tax (VAT), local franchise tax and system loss.

In particular, ERC qualified that “this total rate (of P0.62 per kWh) is less than the expected increase of about P0.92 per kWh plus other adjustments for VAT and systems loss for the February supply month.”

It further emphasized that the total deferred charges amounted to P1.1 billion — and these will be paid mainly to the power suppliers of Meralco that had been utilizing gas on their generating facilities.

“The total deferred generation costs of P1.1 billion, equivalent to P0.40 per kWh, will be collected on a staggered basis in the April and May billings as approved by the regulator,” Meralco also noted.

Without regulatory imprimatur on a phased rate hike, Meralco informed ERC that “a typical 200kWh residential customer is expected to experience a total rate increase of P1.11 per kWh when other billing components, such as systems loss and taxes, are included.”

The utility firm said “given the significant increase in generation charge as a result of the two-week Malampaya shutdown, we coordinated with our suppliers and the ERC for the deferral of portion of the generation costs for the February supply month.”

The Malampaya maintenance downtime was implemented on February 4-18 this year; hence, the cost impact of the higher generation charges had been anticipated to show up in the March billing cycle.

The deferred pass-on of the higher generation cost, which accounts for the biggest component in the bill, “will help us bring down the generation charge increase in the March billing period for the benefit of our customers,” Meralco stressed.

The ERC added “such increase shall be subject to further validation by the Commission as to compliance with the underlying power supply agreements and substantiation of any fuel pass through component, as applicable.”

Apart from escalated generation charge due to the Malampaya shutdown, Meralco similarly stated that it procured supply at higher prices from the Wholesale Electricity Spot Market (WESM); as well as from its other suppliers.

As conveyed by ERC “some of (Meralco’s) suppliers had to use more expensive alternative fuels to ensure the continuous supply of electricity during the scheduled maintenance outage of Malampaya natural gas.” noting further that “the escalation of prices in the WESM contributed to the expected increase in the generation charge in its franchise area.”