Tight supply, weak peso to raise power rates in July
By Alena Mae S. Flores – July 03, 2018 at 07:40 pm
from manilastandard.net
Power rates in the franchise area of Manila Electric Co. may go up in July because of the tight power supply that led to power outages in June and the impact of the peso depreciation, an executive said Tuesday.
“There are indications of a higher generation charge this July,” Meralco head of utility economics Lawrence Fernandez said.
“For one, we recall that the Luzon grid experienced several yellow alerts in the first half of the June supply month when demand in Luzon reached a new high. Meanwhile, in the second half of the month, more capacity went on outage and both conditions may have affected spot market prices,” Fernandez said.
Power rates historically go up in the second quarter because of the tightness in supply amid an increase in demand.
Fernandez said the peso depreciation to 53.34 a dollar in June from 52.52 in May would increase the peso equivalent of dollar-denominated costs of power generation.
“There is high likelihood of higher overall rates, as higher gen cost will generally lead to higher taxes [value added tax and local franchise tax],” he said.
Meralco announced rate reduction in June and May. Consumers enjoyed lower rates of P0.1252 per kilowatt-hour in June, as generation and transmission charges declined.
Meralco’s generation and transmission charges dropped P0.1556 per kilowatt-hour last month, which more than offset the P0.0733-per-kWh increase in the feed-in tariff allowance or FIT-All, the fund used to pay renewable energy developers.
The adjustment in June brought down the overall rate to P9.8789 per kWh from May’s P10.0041 per kWh. This translated into a decrease of around P25 in the monthly bill of a residential customer consuming 200 kWh.
The generation charge alone went down to P4.9828 per kWh in June from P5.0523 per kWh in May.
Meralco said this was a result of the P0.4420-per-kWh decrease in the cost of power from its power supply agreements amid the higher dispatch of Pagbilao Unit 1 and Ilijan Unit 1 which both returned to normal operations after undergoing scheduled maintenance.
Meralco purchased 45 percent of its power supply from its PSAs.
