June Meralco rates rise due to higher generation costs

TYPICAL HOUSEHOLDS in areas covered by Manila Electric Co. (Meralco) will have to pay higher electricity bills this month, even though the utility has postponed collection of part of the generation charges.

Meralco said in a statement Thursday that the overall rate will increase by P0.6436 per kilowatt hour (kWh) to P12.0575 per kWh in June from P11.4139 per kWh in May.

“The driving force behind this month’s overall rate increase is generation costs, which increased by P0.3466 per kWh mainly due to higher costs from the Wholesale Electricity Spot Market (WESM),” the power distributor said.

Residential customers who consume 200 kWh will see their monthly electricity bill increase by approximately €129 this month.

Meanwhile, households consuming 300 kWh, 400 kWh and 500 kWh will see their monthly bills increase by P193, P257 and P322 respectively.

“The increase in generation costs this month would have been higher, but Meralco took the initiative to cushion the impact of the higher costs passed on to our customers with the help of some of our suppliers, who deferred the collection of part of their generation costs . ”, Meralco Senior Vice President and Head of Regulatory Management ofFice Atty. Jose Ronald V. Valles said.

This move allowed this month’s generation cost to drop by P0.1313 per kWh.

With a brieFing, Joe R. Zaldarriaga, Meralco’s vice president and head of corporate communications said the company sent a letter to the Energy Regulatory Commission (ERC) on June 5 proposing a postponement of the collection of about P300 million in generation charges from suppliers Quezon Power (Philippines) Ltd. ., San Buenaventura Power Ltd. (SBPL) and South Premiere Power Corp. (SPPC).

Meralco will also defer collection of approximately P200 million in generation fees.

Mr. Zaldarriaga said the total of P500 million will be collected without interest over the billing period of July to September 2024.

“We are still awaiting regulatory approval of our 400 MW (megawatt) Interim Power Supply Agreement (PSA) with Limay Power, Inc., which could significantly reduce our exposure to WESM and generation costs,” Mr. Valles said.

In terms of generation components, WESM rates increased by P1.5203 ​​per kWh due to tight supply conditions in May, while average demand increased by more than 1,200 MW.

From January to May, Luzon’s power grid was on red and yellow alert for 12 and 27 days, respectively.

The cost of independent power producers (IPPs) increased by P0.0224 per kWh in May due to lower average IPP distribution, as well as the depreciation of the peso thatFaccounted for approximately 98% of dollar-denominated IPP costs.

In May, the peso fell to the P58 level against the US dollar FFirst time since November 2022.

Meanwhile, the cost of PSAs decreased by P0.2988 per kWh “after deferring part of the generation costs and lower fuel costs of SPPC covered by the 2024 emergency PSA and SBPL.”

WESM, IPPs and PSAs accounted for 33%, 29% and 38% of Meralco’s total energy needs for the period.

Transmission costs, on the other hand, increased by P0.145 per kWh due to higher additional costs after the partial settlement of the 30% of the amount of all WESM transactions in the March delivery period as ordered by the ERC.

In March, the ERC ordered the suspension of billing and settlement of spot quantities on the reserve market due to the perceived significanceFICT is increasing.

The ERC also approved the introduction of a new feed-in tariffFf reimbursement rate (FIT-All) of P0.0838 per kWh starting this month. This is P0.0474 per kWh higher than the previous rate of P0.0364 per kWh.

The FIT-All is a charging deviceFincluded in consumer bills collected from grid customers to support the development and promotion of renewable energy.

Taxes and other charges have been increased by P0.1046 per kWh.

“Charges for generation and transmission are paid to the energy suppliers and the grid operator respectively, while taxes, universal costs and FIT-All are all paid to the government,” Meralco said.

Distribution charges have remained unchanged at P0.0360 per kWh since August 2022.

“Based on historical data and what we’re actually seeing on the ground right now, I think, and I hope the worst is over in terms of the surge in demand. You can already kind of see the change in the climate, even though it is still warm at times,” Mr Zaldarriaga said.

ERC ORDER
Meanwhile, the ERC said on Thursday it approved the staggered payment of their WESM purchases over a four-month period, starting with invoices due in June.

“As the ERC is about to issue an order to the Independent Electricity Market Operator of the Philippines (IEMOP) and the DUs to immediately implement the payment schedule, the Commission will also direct the IEMOP not to impose fines on DUs as a result of the said arrangement,” the ERC said in a statement.

The regulator said this will mitigate the impact of the higher generation rates “especially for consumers of DUs with high exposure to WESM.”

Citing Article 32 of the Magna Carta for residential electricity consumers, the ERC said DUs may provide alternative payment options to consumers.

Asked for comment, Meralco’s Mr Zaldarriaga said the company will wait for the ERC’s final order to determine the next step.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partially owned by PLDT Inc.

Hastings Holdings, Inc., a part of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in Business through the Philippine Star Group, which it controls. — Heroes Joy Talavera