Meralco hikes rates for 3rd straight month
Manila Electric Co. (Meralco) has increased power rates for a third straight month this April, without any assurance that power rates will remain the same in May because of the war in the Middle East.
At a briefing on Friday, the electricity distributor, led by tycoon Manny Pangilinan, said this month’s power rates would go up by 53 centavos per kilowatt hour (kWh) to P14.3496 per kWh from P13.8161 in March, translating to an increase of P107 to P267 per month for customers consuming 200 to 500 kWh.
Meralco blamed the depreciation of the peso, which pushed generation charges higher. The generation charge, accounting for more than half of the bill, climbed by P0.5257 per kWh to P8.3864 from P7.8607 per kWh.
This, as the March supply month saw the exchange rate jumping by over P3 to P60.748. Meralco noted the 5-percent decline in a single month was last seen in June 2022.
The weakening of the local currency hit almost all of Meralco’s supply costs from gas plants, and 44 percent of its power supply deals.
Transmission charges, meanwhile, fell by 65 centavos per kWh.
Meralco’s distribution charge, on the other hand, has remained unchanged since August 2022.
Factors behind increase
Despite the increase, Meralco officials said the impact of attacks in the oil-producing region on power rates did not influence this month’s adjustments.
Lawrence Fernandez, Meralco vice president and head of utility economics, said they expect the impact on fuel costs to reflect in the May generation charge.
“It’s really hard to say for now,” Fernandez said. “There are many factors that we need to consider.”
He explained, for example, that fluctuations in the exchange rate is expected to have a substantial impact.
“For the March supply month, we used an exchange rate of P60.75 per US dollar on the last banking day of March. But we can see that the exchange rate today is less than this,” he said. “That can contribute to a downward pressure in the generation cost.”
“But in fuel cost, there is an upward pressure. So we’ll have to see really at the end of the month, once we get the bills from our suppliers, what the net impact will be,” he explained.
He said that the fuel used in March was already reflected in the April bill. “However, the fuel that will arrive this April is already affected by the Middle East conflict, and this will be reflected in the May generation charge,” he told reporters.
But since regulators have implemented special operating guidelines, including the suspension of spot market trading and the imposition of a new pricing mechanism, these should help cushion any steep jump in generation costs.
“We may still feel an increase in the generation cost, but it won’t be as high as what it would have been without the special operating guidelines,” Fernandez said.
Fernandez assured the public that there will be no rotating brownouts because of the state of energy emergency, saying the industry does not anticipate a supply deficiency in the Luzon grid this summer.
Meralco is the country’s biggest power distributor, delivering electricity to over 8.2 million consumers in Metro Manila and nearby provinces.
