Meralco increases power rates by 45 centavos/kwh in July

FILE PHOTO: People wait in line to pay their electric bills at a Meralco branch in Commonwealth Avenue in Quezon City on May 22, 2020. —NIÑO JESUS ORBETA

Home electricity prices in Metro Manila and surrounding areas will increase by 49 centavos per kilowatt hour (kWh) this month, the Manila Electric Co. (Meralco) said on Friday.

Meralco announced the rate hike after two previous rate cuts and will increase the overall rate of a typical household to P12.6435 per kWh, up from P12.1552 per kWh a month ago.

This means that a typical household consuming 200 kWh will cough up an additional P98 to settle their electricity bill.

In a briefing, Meralco vice president Lawrence Fernandez, the company’s head of utility economics, attributed the increase to the earlier spike in fuel prices and the weakening of the local currency against the US dollar.

Fernandez said generation charges went up by P0.3407 per kWh. Charges from power supply agreements (PSAs) and independent power producers (IPPs) both had upward adjustments of P0.4476 and P0.4992 per kWh, respectively.

Fernandez said the market saw global oil prices soar amid the two-week war between Israel and Iran, subsequently affecting the fuel costs of generators.

The depreciation of the peso, meanwhile, affected those dollar-denominated power deals.

Softer spot market

Somehow softening the hike in generation charge was the 17-centavo per kWh decrease from the Wholesale Electricity Spot Market (WESM).

PSAs, IPPs and WESM accounted for 56 percent, 28 percent and 16 percent, respectively, of Meralco’s total energy requirement for the period.

The transmission charge also increased by P0.0734 per kWh, while Meralco’s distribution charge remained unchanged.

Asked about President Ferdinand Marcos Jr.’s target to lower electricity rates, Meralco vice president and head of corporate communications Joel Zaldarriaga said: “We always state that we welcome additional capacities because, at the end of the day, supply will dictate prices.”

Meralco, which earns from distribution, supply and metering charges, covers Metro Manila, Bulacan, Cavite, Rizal and select areas in Pampanga, Laguna, Batangas and Quezon.