Meralco rates up again in March after 2 straight months of decline

MANILA, Philippines — Customers of Manila Electric Co. (Meralco) may see higher power bills in March despite improved energy supply in the Luzon grid, as higher generation costs due to multiple plant outages and a weak peso raised the overall rate for the first time this year.

A typical household consuming 200 kWh per month will see a P13 increase in their electricity bills in March as the overall rate jumps by P0.0625 after two straight months of decline, Meralco said in a statement on Thursday.

The higher power costs could add to the burden of Filipino consumers who are already grappling with rising fuel prices as a result of the escalating Russia-Ukraine war. According to Meralco, residential customers consuming 300 kWh, 400 kWh and 500 kWh will see an increase of P19, P25 and P31, respectively, in their power bills this month. 

That said, Meralco reminded its customers to conserve power and practice energy efficiency amid the global oil price hikes. 

"In the succeeding months, Meralco expects that the continuing increase on global fuel prices would have a significant impact on power rates, particularly on the generation charge," the company said.

Generation charge up this month

Explaining the March adjustment, Meralco said it paid more for electricity it sold to its franchise area. As a result, generation charge stood at P5.4737/kWh, up by P0.2780, on the back of higher fees from the wholesale electricity spot market (WESM), a trading venue where power distributors sell and purchase power at values higher than pre-agreed supply deals. 

"With the increase in demand and the scheduled maintenance outage of Quezon Power and First Gas-San Lorenzo plants, Meralco sourced additional supply from the WESM in the February supply month," the power firm said, referring to its independent power producers (IPPs).

Despite the improvement of the Luzon grid's supply conditions, WESM prices were high last month, with the secondary price cap (SPC) implemented 5.63% of the time, according to Meralco. The SPC is a mechanism which puts a ceiling on traded power when prices are high.

Charges from its IPPs also increased by P0.1625 per kWh because two power plants- Quezon Power and First Gas-San Lorenzo- which went on maintenance shutdowns, and generated less power. "Peso depreciation against the US dollar also contributed to the increase in IPP costs, since around 97% of these costs are dollar-denominated," Meralco said. 

Meanwhile, charges from power supply agreements (PSAs) went up by P0.1510 per kWh as the San Gabriel gas plant, which sources power from the Malampaya facility, continues to be affected. Meralco said the deepwater-gas-to-power project was unable to supply sufficient gas during the covered period.

During the supply month, Meralco sourced majority or 53.4% of its energy requirements from PSAs; 32.7% from IPPs and 13.9% from the WESM.

The power provider said this month's generation charge would have been higher had it not taken the initiative to ask suppliers to defer the collection of portions of their generation costs. 

Meralco added that this month's power rates would have also been higher if it did not implement the "distribution rate true-up refund" of P13.9 billion to its consumers, as ordered by the Energy Regulatory Commission. 

Meralco said its transmission fees, taxes and other charges went down by P0.0232 per kWh during the supply month. 

It reiterated that it does not earn from pass-through generation and transmission charges which go to power suppliers and the grid operator, respectively. Meanwhile, collected taxes, universal charges, and Feed-in Tariff Allowance (FIT-All) are remitted to the government.