Manila Electric Co. (Meralco) announced Tuesday its consumers will see an increase of P0.4621 per kilowatt-hour in their May electricity rates.
Meralco said this brings the overall rate for a typical household to P11.4139 per kWh from P10.9518 per kWh in April on the back of higher costs from the spot market and its power supply agreements (PSAs).
Residential customers consuming 200 kWh will have an increase of around P92 in their total electricity bill. The higher rates followed a significant reduction of almost P1 in April.
The announcement triggered another call for Congress to split the mega-franchise of Meralco into three. In a privilege speech last year, Rep. Dan Fernandez said Meralco has grown too big and dominant in the power industry, warranting a review of its franchise to pave the way for its split.
“It’s high time we renew its franchise to pave the way for the split of the mega-franchise we granted Meralco,” said Fernandez in the speech.
“If possible, we can split it into three franchises since Meralco actually operates in three sectors in Luzon— NCR [National Capital Region], South Luzon [Calabarzon] and North Luzon sector of Pampanga and Bulacan,” he said.
The Laguna lawmaker also said Meralco now controls at least 70 percent of Luzon’s electricity output. “They are so huge and enormous that they have subdivided the whole franchise. They have subdivided [it] into the central, southern, and northern sector,” said the lawmaker.
Fernandez said with 70 percent of the country’s gross domestic product coming from NCR, Meralco could control the Philippines’ economic growth by having full control of electricity in Luzon.
Fernandez cited reports that Metro Pacific Investment Corp. (MPIC), Meralco’s mother company, was acquiring the natural gas power plant in Ilijan town, Batangas province. The plant has a 2,500-megawatt capacity and uses combined-cycle natural gas to operate.
“If you combine the assets of Meralco and Ilijan Power Plant, they will be creating a vertical integration system wherein they will be controlling fuel supply, imported fuel facilities, power supply and distribution under one board of directors,” said Fernandez in a mix of Filipino and English.
Fernandez called this development a concern for national security.
Meralco said driving this month’s overall rate increase was the generation charge which went up by P0.4455 per kWh primarily due to higher costs from the Wholesale Electricity Spot Market (WESM), the trading floor of electricity and the PSAs.
Charges from WESM went up by P1.7913 per kWh due to the tight supply condition in the Luzon grid during the April supply month as demand went up by 2,401 MW.
Meralco said there were three days with yellow alert and five days with yellow/red alerts from normal conditions the previous supply month.
The secondary price cap was triggered 19 percent of the time in April versus only 7 percent the previous month.
Meralco sourced 30 percent of its power requirement from the WESM last month.
Meralco said PSA charges increased by P0.2871 per kWh due to lower excess energy deliveries of some PSAs, which were priced at a discount, and charges from an emergency PSA that covered Meralco’s supply requirements while awaiting regulatory approval of PSAs that underwent a series of Competitive Selection Process (CSPs).
The peso depreciation, which affected 14 percent of PSA costs that were dollar-denominated, also contributed to the increase.
However, tempering the increase in the generation charge was the P0.6942 per kWh reduction in charges from Independent Power Producers (IPPs) due to higher average IPP dispatch and lower fuel prices.
Meralco said the IPP rates reflected the withholding of charges from First Gas, including the incremental gas costs for First Gas-Sta. Rita under its new Gas Sale and Purchase Agreement (GSPA) and costs related to the use of liquefied natural gas (LNG), other than the landed cost of LNG, in accordance with an order from the Energy Regulatory Commission.
The PSAs, and IPPs accounted for 336 percent, and 34 percent respectively of Meralco’s total energy requirement for this period.
Meralco said the transmission charge, taxes, and other charges also registered a net increase of P0.0166 per kWh.
Pass-through charges for generation and transmission are paid by Meralco to the power suppliers and the grid operator, respectively, while taxes, universal charges, and the feed-in tariff allowance or FIT-All are all remitted to the government.
Meralco’s distribution charge, on the other hand, remained unchanged since the P0.0360 per kWh reduction for a typical residential customer beginning August 2022.
Editor’s Note: This is an updated article. Originally posted with the headline Meralco rates up this May due to higher generation charges, tight power supply
