The Energy Regulatory Commission said Thursday that electricity prices in the Manila Electric Co. (Meralco) franchise area would go up by about P0.30 to P0.40 per kilowatt-hour, or an average increase of P80 per bill for those consuming 200 kilowatt-hours per month, by January next year.
ERC chairperson Monalisa Dimalanta said the computation is based on the reports for October and November submitted by Meralco to the regulator’s Regulatory Operations Service and monitoring of the Wholesale Electricity Spot Market by its Market Operations Service.
“Average impact is about P80 for 200 kWh consumption bill,” Dimalanta said.
This developed after Meralco said consumers were facing higher electricity prices in December after it was forced to get supply from the electricity spot market, where prices reached P7 to P9 per kWh.
SMC Global Power Holdings Corp. stopped supplying 670 megawatts to Meralco under its power supply agreement with South Premiere Power Corp.
The PSA was the subject of the recent 60-day temporary restraining order issued by the Court of Appeals.
SPPC supplies 670 MW from the 1,200-MW Ilijan power plant in Batangas.
“This particular SPPC PSA accounts for 12 to 13 percent of the total Meralco supply for October-November. Since it’s priced at P4.30 per kWh, if Meralco replaces that with WESM average of P8 to P8.50, then the impact would be about P0.30 to P0.40 per kWh to consumers,” Dimalanta said.
She said ERC will continue closely monitoring the Wholesale Electricity Spot Market rates because unless Meralco gets a replacement contract soon that is lower than the WESM, “exposure for consumers is at WESM prices which we cannot fix at this point.”
In its decision last Sept. 29, the CA ruled in favor of SPPC and issued a TRO stopping the Energy Regulatory Commission from implementing its decision which denied the temporary rate hike petition of SPPC and Meralco under their 2019 PSA.
SMCGP asked the ERC for a temporary rate increase, citing gas constraints for the Ilijan plant and an unprecedented rise in coal prices for the 1,200-MW Sual coal plant in Pangasinan under San Miguel Energy Corp.
The ERC also awaits action by the agency’s statutory counsel, the Office of the Solicitor General, after the matter was referred for undertaking the appropriate legal remedy, Dimalanta said.
Meralco spokesperson Joe Zaldarriaga said they are exhausting all efforts to mitigate any impact of the SMC cessation of supply to the electricity bills.
He said Meralco was negotiating with other generation companies to secure the 670-MW supply and shield the more than 7.5 million customers from volatile and potentially higher WESM prices.
WESM is the trading floor of electricity, where prices are more volatile, especially if supply is tight.
ERC said the cessation of supply from a bilateral contract or PSA does not excuse the distribution utility from its obligation under Section 23 of Republic Act No. 9136 or EPIRA to supply the electricity in the least cost manner to its captive market.
Meralco head of utility economics Lawrence Fernandez said he could not say yet how much the full impact of the SPPC contract termination would be.
“It really depends on a lot of factors. We still have around two weeks remaining for supply months, and we also don’t know the trend of spot market prices for the coming days,” he said.