Despite a newly-approved refund and the deferment in the increase of charges by generation companies, power rates in Metro Manila will go up by P0.0625 per kilowatt hour (kWh) due to higher generation charges, according to the Manila Electric Co. (Meralco).
But Lawrence Fernandez, Meralco vice president and head of utility economics department, said in a virtual briefing yesterday the effects of the current spike in global crude prices will be felt not until the May billing period.
“If the price of coal increases, cost of generation will also increase and will reflect with an increase in generation charge but the biggest supply of Meralco comes from natural gas plants using the Malampaya natural gas,” Fernandez added.
“The price of Malampaya gas is affected by world crude oil prices and these past few weeks it has been rising. Eventually, it will be reflected in the cost of Malampaya natural gas and thereafter, in the generation cost. Malampaya’s pricing is updated every quarter so the next updating is on April and its effects will be felt in the May generation charge,” Fernandez added.
The rate adjustment for March brings overall power rates of Meralco to P9.6467 per kWh from last month’s P9.5842 per kWh. This is equivalent to an increase of around P13 in the total bill of residential customers consuming 200 kWh monthly.
Meralco said the increase could have been higher if not for the Energy Regulatory Commission’s (ERC) approval of an additional distribution rate true-up for December 2020 to December 2021, equivalent to a total of P4.8 billion or an average refund of P0.1064 per kWh for customers.
The power distributor said for the March 2022 billing, total refunds to residential customers would total P0.4684 per kWh.
Meralco said power generators such as Quezon Power (Philippines) Ltd. Co. and First Gas Power Corp. have deferred a generation charge increase of over P500 million which would have added 18 centavos to this month’s power rates.
Instead, the two generation companies will bill the amount on a staggered basis in the next three months for 6 centavos.
Meralco’s generation charge for March went up by P0.2780 to P5.4737 per kWh from P5.1957 per kWh, mainly due to higher charges from the wholesale electricity spot market (WESM).
Despite improvement of supply conditions in the Luzon grid, WESM prices remained elevated as charges increased by P13.4211 per kWh with secondary price cap imposed 5.63 percent of the time with the increase in demand and the scheduled maintenance outage of two major power plants.
Charges from independent power producers (IPPs) also increased by P0.1625 per kWh mainly due to the lower dispatch of power plants that underwent maintenance outages to assure availability during summer.
Meralco also cited the peso depreciation against the US dollar for the increase in IPP costs, since around 97 percent of these costs are dollar-denominated.
Charges from power supply agreements (PSAs) were also higher by P0.1510 per kWh, as the dispatch of natural gas-fired power plants continue to be affected by the Malampaya facility’s inability to supply sufficient fuel.
Despite the increase in several line items, Meralco said transmission charge, taxes and other charges for residential customers registered a net decrease by P0.0232 per kWh while the collection of the universal charge-environmental charge amounting to P0.0025 per kWh remains suspended.
Meralco’s interim distribution rates comprised of distribution, supply and metering charges, the only bill component paid to the company, remained at P1.381 per kWh for 80 months.
WESM accounted for 13.9 percent of the company’s total power requirements for the month; IPPs, 32.7 percent and: PSAs, 53.4 percent
