Generation charges of electricity retailer Manila Electric Co. are forecast to remain flat in October because of the peso depreciation, an executive said over the weekend.
Lawrence Fernandez, Meralco vice president and head of utility economics, said while the company had not yet received bills from suppliers, “we expect the generation charge to remain flat, or to slightly inch up, mainly due to the continued depreciation of the Philippine peso versus the US dollar.”
He said the Philippine peso depreciated to 51 against the greenback last week and would continue to impact charges from the independent power producers, including First Gas-Sta Rita, First Gas-San Lorenzo and Quezon Power Philippines Ltd. Supply contracts with these generators are mostly dollar-denominated.
Fernandez said Meralco was waiting for the movement of transmission charges that account for around 9 percent of overall rates.
“The transmission charge includes wheeling and ancillary service charges of NGCP (National Grid Corp. of the Phiippines). Presently, however, we expect the overall movement to be flattish,” he said.
Meralco’s overall rates went up in September by P0.1055 per kilowatt-hour to P9.1091 per kWh from P9.0036 per kWh in August due to higher generation charge.
The company attributed the higher generation charge due to the net settlement surplus corrections at the Wholesale Electricity Spot Market, the trading floor of electricity and increased costs from power supply agreements (and IPPs.
The generation charge, which makes up about 55 percent of customers’ electricity bills, increased by P0.1117 to P5.0439 per kWh in September from P4.9322 per kWh in August.
Meanwhile, charges from Meralco’s PSAs registered an increase of P0.2494 per kWh for September due to the reduction in demand brought about by the re-imposition of enhanced community quarantine in Metro Manila and neighboring regions which led to lower excess energy deliveries.
The PSAs remained Meralco’s lowest cost source of supply despite the increase. Meralco sourced 53.2 percent of its supply requirements from its PSAs in August.
IPP charges of Meralco also increased by P0.0955 per kWh on lower average plant dispatch with the forced outage of QPPL and higher fuel costs of Sta. Rita and San Lorenzo due to the use of more expensive alternative liquid fuel for their continued operation amid the Malampaya gas restriction.
Meralco sourced 36.8 percent of its power requirements from the IPPs during the August supply month.
