Ahead of the official announcement of rate adjustments for March, Manila Electric Co. (Meralco) said the cost of electricity in its franchise area could increase after two consecutive months of decline.
But this cannot be attributed as yet to rising fuel prices.
Initial indications of the company cite higher generation charge as the main reason for the likely rate hike.
“WESM (wholesale electricity spot market) prices remained elevated in the February supply month and despite the absence of yellow alert, the secondary price cap was implemented 5.63 percent of the time,” said Lawrence Fernandez, Meralco vice president and head of utility economics department.
Fernandez said in a statement the higher share of supply from WESM as a result of the scheduled maintenance of major power plants is also expected to contribute to the generation charge increase.
“The continuing depreciation of peso is also seen to magnify the effect of high fuel prices in the world market. Note, however, these are pass-through charges 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 said movements in the global crude oil prices indirectly affect the company’s generation costs, mainly through Malampaya gas prices as several power plants which supply one-third of the company’s electricity requirements utilize the locally-sourced natural gas fuel.
However, Meralco clarified Malampaya’s gas prices is currently based on world crude oil prices from July to December 2021 with the current price not yet reflecting the recent surge in oil prices.
The recent surge in global crude costs will be reflected in the Malampaya gas pricing beginning on the May 2022 generation charge.
Last month, Meralco implemented a P0.1185 per kilowatt hour (kWh) reduction due to lower charges from independent power producers and the WESM which more than offset an increase in the rate from power supply agreements.
The adjustment was equivalent to a reduction of around P24 in the bill of a residential customer consuming 200 kWh monthly and brought overall power rates to P9.5842 per kWh from the previous P9.7027 per kWh.– Jed Macapagal
