Manila Electric Co. (Meralco) said Thursday that electricity prices would likely go up this month on higher prices at the spot market and completion of the December distribution refund.
“While forex improved, which would help manage the dollar-denominated portions of generators’ charges, there continued to be pressure on WESM [Wholesale Electricity Spot Market] prices to remain elevated last December, as the reductions in peak and average demand were more than offset by the increase in capacity on outage,” Meralco vice president and head of utility economics Lawrence Fernandez said.
Fernandez said the December supply month saw the grid placed under several yellow alerts and experienced more days with the imposition of the secondary price cap compared to the November supply month.
The preliminary effective spot settlement price at the WESM, the trading floor of electricity, reached P8.796 per kilowatt-hour in December, up from P8.62 per kWh in November.
ESSP refers to the effective rate paid by customers for WESM transactions for each billing month. Meralco sourced below 10 percent of its power supply requirements from the WESM in 2022.
Meanwhile, Meralco was forced to secure additional supply from the WESM after SMC Global Power Holdings Corp. subsidiary South Premiere Power Corp. ceased supplying 670 megawatts on Dec. 7, 2022.
The power retailer’s 2019 power supply agreement SPPC was subjected to a 60-day temporary restraining order issued by the Court of Appeals.
“To the extent Meralco became more exposed to WESM because of SPPC’s cessation of supply, generation charges will be affected,” Fernandez said, adding that he cannot give figures of the impact yet.
“Besides this, the DRTU-1 [distribution rate true-up] refund will have been completed in December so that this deduction will no longer appear on January bills,” Fernandez said.
Meralco’s P0.28 per kilowatt-hour refund ended in December and will immediately impact the January rates.
“There is an expected adjustment which will impact {January rates]… Completion [of refund] is December; the impact is January 2023 of close to P0.28 per kWh that will no longer be there…The suspension of SMC supply to Meralco will also almost probably result to an upward adjustment, but it remains to be seen,” Meralco assistant vice president and spokesperson Joe Zaldarriaga said earlier.
He said that while the suspension is not a whole month, there is still a possibility of increasing rates.
The Energy Regulatory Commission estimates the increase at around P0.30 to P0.40 per kWh, but Meralco does not expect the full amount to be reflected. Zaldarriaga said other factors are also expected to impact rates in January.
Meralco announced an increase of P0.3297 per KWh for December due to the completion of another refund equivalent to P0.4669 per kWh for residential customers.