Another bitter-sweet moment awaits consumers as Manila Electric Co. (Meralco) gets set to implement a “slight upward adjustment” in power rates this month even after local oil firms substantially rolled back fuel prices today.
The power company announced a P0.0327 per kilowatt-hour increase in electricity rates in August, bringing the overall rate for a typical household to P11.6339 per kWh from the previous month’s P11.6012 per kWh.
For residential customers consuming about 200 kWh, the adjustment will bring about an increase of around P7 in their total electricity bill.
Meralco vice president and head of corporate communications Joe Zaldarriaga said certain developments derailed their previous forecast of an electricity price reduction.
He noted that the main driver of the power rate hike is the P0.1086 per kWh increase in the transmission charge for residential customers, which, in turn, was triggered by higher charges of the grid operator for ancillary service, which covers reserves necessary to maintain grid reliability.
He said ancillary service charges went up by more than 50 percent as charges for contingency and dispatchable reserves doubled.
The transmission charge increase more than offset the P0.0503 per kWh reduction in the generation charges, Zaldariaga explained.
These include charges from Meralco’s independent power producers (IPPs) which were lower by P0.2974 per kWh due to higher IPP dispatch and the Peso’s appreciation, affecting around 97 percent of IPP costs that were dollar denominated.
Other factors, such as the 70 percent cost recovery from ancillary charges at the reserve market as directed by the Energy Regulatory Commission, will have an impact on future electricity prices, the power firm executive said.
Meanwhile, local oil companies implemented a “big time” oil price rollback, slashing pump prices of gasoline by some P2.45 per liter, kerosene by P2.40 per liter, and diesel by P1.90 per liter effective early Tuesday morning.
This is the fourth consecutive week of decline in diesel and kerosene, and the third in gasoline, reflecting the continuing volatility in world oil prices amid United States recession worries and geopolitical tensions.
“The sharp declines underscored the market’s continued struggle between the recession concerns and the geopolitical tensions. Other bearish factors such as the growing concerns about lackluster consumption, especially in China, a worsening outlook for the global economy, and a stronger peso outweigh bullish factors that push the oil prices up. The oil market remains volatile for the coming weeks,” Department of Energy director for the oil industry management bureau Rodela Romero said.
Year-to-date total adjustment of gasoline and diesel stands at a net increase of P9.50 per liter and P6.65 per liter, respectively.
On the other hand, kerosene has a total net decrease of P0.75 per liter.
Editor’s Note: This is an updated article. Originally posted with the headline Meralco rates up in August
