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Friday, March 29, 2024

Meralco sets rate hikes for next 3 months

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The Manila Electric Co. (Meralco) on Monday disclosed that the overall rate for a typical household went up by P0.5363 to P10.1830 per kWh this month from the P9.6467/ kWh last month.

Meralco said the adjustment was equivalent to an increase of about P107 in the total bill of a residential customer consuming a monthly average of 200 kWh.

The company said higher charges from its independent power producer (IPP) and the Wholesale Electricity Spot Market (WESM), the trading floor of electricity, triggered the generation charge increase.

The generation charge went up by P0.3987 to P5.8724/kWh from the P5.4737/kWh registered in March.

“This month’s generation charge increase would have been significantly higher, but Meralco coordinated with the Energy Regulatory Commission (ERC) and some of its suppliers to again defer collection of portions of their generation costs to cushion the impact on the customers’ bills,” said Jose Ronald Valles, head of Meralco’s regulatory management office.

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Valles said on top of the additional deferred generation charges from suppliers totaling some P945 million, ERC also directed Meralco to defer collection of P300 million in generation costs, which further reduced this month’s generation rate by about P0.11 per kWh.

All these charges would subsequently be billed on a staggered basis over the next three months, as ordered by the ERC.

On top of the deferrals from March, there was another deferral of P945 million from Meralco suppliers and P300 million that Meralco would not collect from its customers this month, for a total of P1.2 billion in generation cost that would not be collected in April, Lawrence Fernandez, Meralco head of utility economics said.

Fernandez said the P1.2 billion collection will be amortized without interest in May to July, equivalent to about P0.15/kWh each month.
Charges from Meralco’s IPPs increased by P1.4885/ kWh mainly due to the scheduled maintenance of Quezon Power plant that lasted until March 24, and the higher fuel costs of First Gas–Sta. Rita.

Meralco said the Malampaya facility’s continued failure to supply sufficient natural gas resulted in Sta. Rita power plant utilizing more expensive liquid fuel to ensure continuous supply.

The peso depreciation against the US dollar also contributed to the increase in IPP charges, since around 97 percent of these costs are dollar-denominated, the utility firm said.

The firm also said WESM prices remained high in March and the secondary price cap was imposed 4.49 percent of the time during the supply month amid tight supply conditions in the Luzon grid.

Meralco said peak demand in Luzon rose by more than 1,500 megawatts (MW) with the onset of the dry season and increase in economic activity after Metro Manila and nearby other provinces were placed on lower pandemic alert level beginning March.

The higher demand and the maintenance shutdown of Quezon Power prompted Meralco to source additional supply from the WESM.

Charges from Power Supply Agreements (PSAs), on the other hand, were lower by P0.1068/kWh due to the deferral of generation costs.

Meralco sourced bulk of its supply requirement from its PSAs at 51.7 percent, followed by the IPPs AT 31 percent and WESM at 17.4 percent.

Meanwhile, Meralco warned that generation rates were still expected to increase in the coming months.

“On top of the deferred generation charges, the impact of the quarterly repricing of the Malampaya natural gas for the April supply will be reflected in the generation charge in May,” Valles said.

“Electricity consumption historically increases during the dry months, and this is expected to also weigh on the customers’ power bills,” he
added.

In addition to deferred generation charges, Meralco’s refund of P18.7 billion in distribution-related charges helped temper this month’s increase.

Meralco said this is equivalent to a total refund of P0.4684/kWh for residential customers.

Meralco secured the ERC’s provisional approval to implement a P13.9-billion Distribution Rate True-Up (DRTU) refund to its customers for 24 consecutive months, or until the amount has been fully refunded.

This is equivalent to a rate refund of P0.2761 per kWh for residential customers, implemented beginning March 2021.

The refund amount represented the difference between the Actual Weighted Average Tariff and the ERC-approved Interim Average Rate for distribution-related charges for the period July 2015 to November 2020.

Following the ERC Order in March 2022 to expand the period subject of the refund to include December 2020 to December 2021, Meralco last month started another refund to cover the additional P4.8 billion.

This is equivalent to P0.1923/kWh rate refund for residential customers and would be implemented for an estimated period of 12 months, or until the amount is fully refunded.

Transmission charges for residential customers had a slight increase of P0.0071/ kWh, while taxes and other charges registered a net increase of P0.1305/kWh mainly because of higher generation costs.

The collection of P0.0025 per kWh representing the Universal Charge-Environmental Charge remained suspended as ordered by the ERC.

Meralco reiterated that it only earns from distribution, supply, and metering charges, which have remained unchanged since the reduction in
July 2015.

Meanwhile, pass-through charges from generation and transmission were being paid to the power suppliers and the system operator, respectively, while taxes, universal charges, and Feed-in Tariff Allowance (FIT-All) were all remitted to the government.

Meralco also said it continuously works with the government to ensure the delivery of stable and reliable electricity, especially to the critical sites identified by the Commission on Elections.

The company also expressed readiness to address any electricity-related problems that might occur in any of the over 2,900 polling and canvassing centers and vital election sites within its franchise area.

To ensure the electrical facilities in these sites would be in good condition in time for the elections, Meralco conducted inspections and
maintenance operations on its distribution facilities.

Meralco crews and contractors, along with generator sets and floodlights, would be deployed in strategic locations across its franchise area to immediately address any electricity-related problems.

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