Meralco expects higher generation charge for July

MANILA, Philippines — Manila Electric Co. (Meralco) expects an increase in generation charge this month due to tight power supply from the previous month and the further depreciation of the peso.

“There are indications of a higher generation charge this July,” said Lawrence Fernandez, head of utility economics at Meralco.

The June supply month registered deficient power supply which led to the raising of a yellow alert status in the Luzon grid.

A yellow alert means there were not enough reserves to cover the largest running generating unit at the time, but does not necessarily lead to power outages.

“We recall that the Luzon grid experienced several yellow alerts in the first half of the June supply month when demand in Luzon reached a new high. Meanwhile, in the second half of the month, more capacity went on outage and both conditions may have affected spot market prices,” Fernandez said.

The peso continued to weaken against the dollar, which could have an impact on dollar-denominated charges, he added.

“The peso weakened from P52.52 to P53.34, which will increase the peso equivalent of dollar-denominated costs,” Fernandez said.

Meralco said around 96 percent of Independent Power Producers’ charges are dollar-denominated.

Last month, Meralco rates were reduced for the second consecutive month due to lower generation and transmission charges.

Meralco customers saw a decline of P0.1252 per kilowatt-hour (kWh) in the power distributor’s overall rate from P10.0041 per kWh in May to P9.8789 per kWh in June.