Ahead of the official announcement on rate adjustments for April, the Manila Electric Co. (Meralco) said cost of electricity in its franchise area would likely increase on higher generation charge.
“WESM (wholesale electricity spot market) prices were higher due to continued tight supply conditions, as peak demand in Luzon rose by more than 1,500 megawatts from the February to March supply months. Sustained high WESM prices led to the secondary price cap being imposed for 4.5 percent of the March trading intervals,” said Lawrence Fernandez, Meralco vice president and head of utility economics department, in a statement.
Fernandez said higher generation charge is due to the continued pressure to generation costs of the Malampaya gas supply restriction that forced natural gas-fired power plants to shift to more expensive liquid fuel. He also cited the impact of higher international coal prices and peso depreciation.
“Aside from these factors, the April generation charge will factor in the first amortization of generation costs whose collection was deferred in March. This is equivalent to an add-on of around 6 cents per kilowatt hour (kWh) in the generation charge,” Fernandez said.
Last month, Meralco implemented a P0.0625 per kWh increase as newly approved refunds and generation companies’ deferment of charges failed to offset other factors that pushed higher generation charges.
