Meralco power rates up by P2/kWh in July

Manila Electric Co. (Meralco) customers will have to dig deep into their pockets this month as the power distributor is imposing an increase of P2 per kilowatt-hour (kWh), pushing the overall rate to P11.6012 per kWh.

For households with a monthly power consumption of 200 kWh, this will mean a hike of around P430 in their July bill.

In a briefing on Monday, Meralco head of corporate communications Joe Zaldarriaga said the hefty upward adjustment was due to “the normalization of power costs.”

“We had a disclaimer as early as last month that in July, consumers must anticipate a big increase because electricity costs would return to normal level, plus we will collect the deferred cost,” he explained.

The company said it recorded a higher generation charge, which jumped by P2.0021 per kWh, as prices in the Wholesale Electricity Spot Market (WESM) normalized following “artificially low rates” in June.

Last month’s rates were supposed to be higher than May, but Meralco slashed its rate by P1.9623 per kWh after the Energy Regulatory Commission (ERC) ordered the company to postpone the collection of the WESM portion of the generation charge to cushion its financial impact on consumers due to power outages nationwide.

Instead, there will be a staggered collection of the generation charge until September.

WESM is an avenue for producers and distributors to trade power and get a supply boost, especially during hotter months when usage of electricity goes up.

Higher WESM charges

Meralco said that for the July billing, WESM charges went up by P6.6370 per kWh. But thanks to the colder weather, demand in the Luzon grid fell, resulting in lower spot market prices.

Charges from independent power producers (IPPs) also climbed by 44 centavos per kWh due to higher fuel costs and lower average plant dispatch. Charges from power supply agreements also increased by 35 centavos per kWh while the transmission charge went down by 15 centavos per kWh.

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While consumers face higher power bills this month, Meralco head of utility economics Larry Fernandez hinted at a possible decrease in rates in August.

Lower August rate likely

“There is hope that the rates will go down in August. We have already seen in the spot market that since the rainy season has started, demand has also decreased and the reserve levels in the spot market are also improving,” Fernandez said.

ERC Chair and CEO Monalisa Dimalanta said that while they had anticipated a rate hike this month, the jump in the generation charge was “higher than expected.”

“I think the higher rate [compared to last month] is expected, particularly for Meralco since they are implementing two staggered payment schemes—one arranged by them with their IPPs and the other as ordered by the Commission on WESM purchases. Bulk of Meralco’s supply comes from its IPPs,” she told reporters.

“Admittedly, though, the P2.0021/kWh generation rate increase is higher than expected. In any event, the rates are subject to the Commission’s validation pursuant to our cost adjustment (over/under) regulations,” Dimalanta added.