Weaker peso, pricier reserves may offset lower spot market prices
Electricity rates in Meralco-serviced areas may climb this July, driven by expected increases in both generation and transmission charges, the power distributor said on Tuesday.
Joe Zaldarriaga, Meralco vice president and corporate communications head, said the continued depreciation of the Philippine peso is expected to push generation costs higher, particularly those tied to dollar-denominated power supply contracts.
“While we have yet to receive all the final billings from our suppliers, indications point to a possible increase in the generation charge this month. This may be mainly due to the peso depreciation,” Zaldarriaga said. “We hope the expected increase will be mitigated by lower WESM (Wholesale Electricity Spot Market) charges.”
He added that a spike in reserve market prices in June could also push transmission charges higher.
Generation charges cover the cost of electricity that Meralco buys from its suppliers, while transmission charges are collected on behalf of the National Grid Corporation of the Philippines (NGCP) for the use of its transmission network.
Power cost trend
Meralco is expected to release the official July rate adjustment within the week. In June, the utility cut power rates by P0.1076 per kilowatt-hour (kWh) following lower generation charges brought on by cheaper fuel and improved power plant output.
The reduction translated to a P22 savings for a typical household consuming 200 kWh per month and brought total electricity rates down to P12.1552/kWh.
Meralco currently serves all cities in Metro Manila, including key areas in Bulacan, Cavite, Rizal, Batangas, Laguna, Quezon Province, and Pampanga.
Spot market prices dip
Earlier, the Independent Electricity Market Operator of the Philippines (IEMOP) reported a decline in spot market prices nationwide as of June 25. The average WESM price stood at P3.86 per Wh, down 3.9 percent from P4.01 per kWh in May.
IEMOP attributed the decline to both weaker demand and lower supply. National average demand slipped 4.1 percent to 14,545 megawatts (MW), while supply fell 3.5 percent to 21,432 MW.
Despite this, Meralco cautioned that external cost pressures—including peso depreciation and reserve pricing—may still outweigh the benefits from the spot market, leading to an overall increase in consumer bills this month
