Consumers of Manila Electric Co. (Meralco) would have to brace for higher rates by P0.6436 per kilowatt hour in their June bills due higher generation charges driven largely by higher charges at the electricity spot market.
Meralco said the overall rate for a typical household would increase to P12.0575 per kWh from the previous month’s P11.4139 per kWh.
Residential customers consuming 200 kWh will see an increase of around P129 in their total electricity bill.
Meralco said driving this month’s overall rate increase is the generation charge, which went up by P0.3466 per kWh mainly due to higher costs from the Wholesale Electricity Spot Market (WESM), the trading floor of electricity.
“The increase in the generation charge this month would have been higher, but Meralco took the initiative to cushion the impact of the higher pass-through costs to our customers with the help from some of our suppliers, which deferred the collection of portions of their generation costs,” Meralco senior vice president and head of regulatory management office Jose Ronald Valles said.
Meralco, along with Quezon Power (Philippines) Ltd., San Buenaventura Power Ltd. Co. (SBPL), and South Premiere Power Corporation (SPPC), deferred the collection of around P500 million in generation costs, pulling down this month’s generation charge by P0.1313 per kWh.
This will instead be billed on a staggered basis over the next three months, as approved by the Energy Regulatory Commission (ERC).
“We are still waiting for regulatory approval of our 400-MW interim power supply agreement (PSA) with Limay Power, Inc. which could significantly reduce our WESM exposure and generation costs,” Valles added.
Meralco’s WESM charges were higher by P1.5203 per kWh due to tight supply conditions in May as average demand went up by more than 1,200 MW.
The Luzon grid was on yellow alert for 12 days and was on red alert last May 23 and the persistently high spot market prices triggered the imposition of the secondary price cap 19 percent of the time.
Charges from Independent Power Producers (IPPs) also increased by P0.0224 per kWh, net of deferred generation costs, due to lower average IPP dispatch and Peso depreciation affecting around 98 percent of IPP costs that were dollar-denominated.
Meralco said tempering the increase in the generation charge is the P0.2988 per kWh decrease in charges from PSAs following deferral of portion of generation costs and lower fuel costs of SPPC covered by its 2024 emergency PSA and SBPL.
The WESM, IPPs, and PSAs accounted for 33 percent, 29 percent, and 38 percent of Meralco’s total energy requirement for the May supply period.
Meralco said the transmission charge for residential customers increased by P0.1450 per kWh due to higher ancillary service charges following the partial settlement of the 30 percent of the total reserve trading amount of all WESM trading transactions during the March 2024 supply period, as ordered by the ERC.
The ERC also approved the implementation of a new feed-in tariff allowance (FIT-All) rate of P0.0838 per kWh starting June 2024, from the previous rate of P0.0364—or an increase of P0.0474 per kWh. Taxes and other charges also registered a P0.1046 per kWh net increase.
Pass-through charges for generation and transmission are paid to the power suppliers and the grid operator, respectively, while taxes, universal charges, and FIT-All are all remitted to the government.
Meralco’s distribution charge, on the other hand, has not moved since the P0.0360 per kWh reduction for a typical residential customer in August 2022.