Power rates in the franchise area of Manila Electric Co. may go up in April on tight supply, gas supply restrictions, the impact of international coal prices and peso depreciation, an executive said Thursday.
“Initial data points to an upward adjustment in April bills, due to a higher generation charge consistent with what the DOE [Department of Energy] and ERC [Energy Regulatory Commission] expected,” Meralco vice president and head of utility economics Lawrence Fernandez said.
Fernandez said prices at the Wholesale Electricity Spot Market, the trading floor of electricity, rose on tight supply conditions, as peak demand in Luzon increased by more than 1,500 megawatts from the February to March supply months.
“Sustained high WESM prices led to the secondary price cap being imposed for 4.5 percent of the March trading intervals,” Fernandez said.
He said the persisting Malampaya gas supply restriction forced the First Gas plants to shift to more expensive liquid fuel, adding pressure to generation costs.
“The impact of higher international coal prices and peso depreciation is also expected to weigh on the generation charge,” he said.
Fernandez said that aside from these factors, the April generation charge would also factor in the first amortization of generation costs whose collection was deferred in March.
Meralco took the initiative to cushion the impact in the bills of customers last month by coordinating with some of suppliers to defer collection of portions of their generation costs.
Quezon Power and First Gas agreed to defer the collection of P500 million, equivalent to a potential deferral of P0.18 per kWh.
These deferred charges will subsequently be billed on a staggered basis over three months starting March. This is equivalent to an add-on of around P0.06 per kWh in the generation charge.
“The generation charge is a pass-through cost, and as far as Meralco’s own cost is concerned, the distribution charge has not moved since its reduction in July 2015,” Fernandez said.
Meralco posted slightly higher rates by P0.0625 to P9.6467 per kWh in March from P9.5842 per kWh in February.
Meralco said the overall increase in the March power rates would have been higher if not for the implementation of an additional distribution rate true-up refund.
Meralco received an ERC order dated Feb. 23 expanding the coverage of the refund to include the December 2020 to December 2021 period, which amounted to an additional P4.8 billion.