Power rates may go upward next month following San Miguel Corp.’s (SMC) move to stop supplying 670 megawatts (MW) to Manila Electric Co. (Meralco).
This developed as the Energy Regulatory Commission (ERC) announced it has launched an investigation on the accuracy and reasonableness of generation rates being passed on by distribution utilities to consumers.
Meralco said the 670 MW lost from SMC is equivalent to 12 percent of the company’s supply for a month at a cost of P4.30 per kilowatt hour (kWh).
Lawrence Fernandez, Meralco vice president and head of utility economics department, said in a briefing yesterday, this will force the company to secure power from the Wholesale Electricity Spot Market (WESM) where prices ranged from between P7 to P9 per kWh as of Monday and Tuesday this week.
But Fernandez said the final rates for next month will depend on a number of factors.
“We still have around two weeks and we don’t know the trend of spot market prices for the coming days,” Fernandez added. Joe Zaldarriaga, Meralco spokesman, said the company is hopeful WESM prices in the next two weeks will be lower as historically, power demand during the holidays tend to go lower.
Meralco is evaluating at least two offers for the replacement of the lost 670 MW, hoping to procure the lowest cost of electricity for consumers.
SMC subsidiary San Miguel Global Power notified Meralco it is ceasing supply on its 670 MW power supply agreement effective yesterday.
In a separate statement, ERCsaid as of noon yesterday, it has not received any official communication from Meralco on the cessation of 670 MW supply.
Monalisa Dimalanta, ERC chairperson, said it is not clear if SMC served a notice of power supply agreement (PSA) termination or a suspension of supply considering that the case before the Court of Appeals filed by the company is still for final resolution.
Dimalanta added cessation of supply from a bilateral contract or PSA does not excuse the distribution utility from its obligation “to supply electricity in the least cost manner to its captive market.”
In another statement, ERC said the investigation on the pass-through charges was prompted by recent increases in electricity rates and complaints received from consumers, with the investigation to cover all private utilities (PUs) and electric cooperatives (ECs) and their respective power suppliers nationwide.
“In the course of ERC’s monitoring of monthly submissions from PUs and ECs of their generation charges… We have identified the need to conduct a more thorough validation of the passed-on or pass-through charges under certain PSAs,” Dimalanta said.
The ERC said the validation requires submission of, among others, documents to support the detailed calculation of fuel charges that account for a significant portion of the increases in electricity rates since January 2022.
The investigation is also meant to confirm whether or not the charges pass-on to the consumers are only eligible costs and there are no hidden and extraordinary charges.
