Meralco: Weaker peso puts pressure on generation cost
BY LENIE LECTURA – OCTOBER 10, 2022
from Business Mirror
Power generation rates may increase this month, but the reduction in FIT-All rates will likely offset any upward adjustment in the generation charge.
According to Meralco head of corporate communications Joe Zaldarriaga, Wholesale Electricity Spot Market (WESM) rates and the depreciation of the peso have contributed to the rising cost of generation charge, a major component of an electric bill.
“The persistently high WESM prices in September supply month and Peso depreciation, which affects costs of IPPs (Independent Power Producers) and PSAs (Power Supply Agreements), are expected to put an upward pressure on the generation charge in the October bills,” he said.
However, the implementation of lower FIT-ALL starting this month may help offset any increase in the generation charge, added Zaldarriaga.
Meralco will begin implementing the ERC-ordered 6.19 centavos per kilowatt hour (kWh) reduction in the FIT-ALL beginning this October bills. The lower FIT-All , along with a much reduced use of expensive alternative fuel by First Gas, may offset the effects of the peso’s depreciation and higher WESM charges.
The utility firm will announce Monday the final figures for October power rates.
Last month, overall electricity rates rose to P9.9365 per kWh from P9.5458 per kWh in August. The P0.3907 per kWh rate increase was equivalent to around P78 in this month’s power bills for residential customers consuming 200 kWh a month.
Meralco said last month that the ongoing Malampaya gas supply restriction necessitated the increased use of more expensive alternative fuel by First Gas Sta. Rita and San Lorenzo to ensure continuous supply. The depreciation of the peso also pushed up charges from the independent power producers (IPPs) and the power supply agreements (PSAs) since 98 percent of total IPP costs and 36 percent of PSA costs are dollar-denominated.
The continued rise in international coal prices also contributed to the PSA rate increase.
In July, the utility firm reported that its consolidated core net income in the first half rose by 15 percent to P13.1 billion from P11.4 billion in the same period last year on the back of strong energy sales and earnings from the power generation business.
Consolidated reported net income, meanwhile, improved 32 percent to P13.1 billion from P9.9 billion with the adjustments made last year in relation to the passing into law of the Corporate Recovery and Tax Incentives for Enterprises Act, and recognition of foreign exchange gains this year versus foreign exchange losses in 2021.
