Spikes in WESM prices to hike Meralco rates this May

The recurring spikes in prices at the Wholesale Electricity Spot Market (WESM) will drive up the electricity rates that will be passed on to roughly 7.5 million customers of Manila Electric Company (Meralco) in their May billing cycle.

According to Meralco Vice President and Head of Corporate Communications Joe Zaldarriaga, “there is an upward pressure on electricity bills this month, mainly due to the expected increase in the generation charge.”

He explained that “higher demand drove WESM prices in the last supply month,” and compounded by the depreciation of the Philippine peso versus the greenback.

As noted by the utility firm, there have been significant portion of costs linked to its power supply agreements (PSAs) and contracts with independent power producers (IPPs) that are dollar-denominated, hence, the fall of the local currency’s value will have cost implications in the power rates.

Meralco primarily indicated that the scale of trading intervals in the spot market affected by the secondary price cap doubled in the last supply month of April to 22-percent; from a leaner level of 11-percent in March.

Additionally, Zaldarriaga stated that the remaining P0.20 per kilowatt hour (kWh) staggered pass-on from the shutdown of the Malampaya production facility will exert added upward pressure on the overall tariff that will be reflected in the bills this month.

To recall, a regulatory imprimatur has allowed Meralco to spread within March to May billing months the aggregate increase in charges that accrued on the duration of the maintenance downtime of the country’s commercial gas field.

Zaldarriaga similarly emphasized that “this month’s bills will reflect the P0.0433 per kWh increase in universal charge for missionary electrification (UC-ME)” – that was based on a recent order rendered by the Energy Regulatory Commission.

The UCME is a pass-through charge to all ratepayers, and it is being funneled to state-run National Power Corporation (NPC) to partly cover the subsidy being extended for the provision of electricity service to consumers at off-grid domains.

Woefully, the increase in the electricity rates this month will add up to the string of bad news already tormenting Filipino consumers – with some parts of Luzon and Visayas having just been knocked off by rotational blackouts or service interruptions.

And given the main power grid’s predicament over tight supply, Meralco is intensifying its call on the consumers to conscientiously opt for energy efficiency and conservation (EE&C) as a lifestyle choice despite the mare’s nest of soaring heat within the stretch of the summer months.

“Meralco is working hand-in-hand with the DOE (Department of Energy) in empowering consumers to continuously practice energy efficiency to better manage their electricity consumption, which usually spikes mainly due to increased use of cooling appliances,” the utility firm said.

It highlighted that the EE&C plea has to be reinforced given the heightened warning of the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) of a prolonged El Nino that will kick off by June this year until the first quarter of 2024.