Meralco to apply staggered hike in generation charge

MANILA, Philippines — Manila Electric Co. (Meralco) is giving its consumers a relief from the hefty hike in generation charge on their electricity bills this month by implementing a staggered increase.

Given the significant rise in generation charge, Meralco said the company has coordinated with its suppliers and the Energy Regulatory Commission (ERC) for the deferral of portion of the generation costs for the February supply month.

“This will help us bring down the generation charge increase in the March billing period to the benefit of our customers,” Meralco said.

The power distributor said the total deferred generation costs of P1.1 billion, equivalent to 40 centavos per kilowatt-hour (kWh), would be collected on a staggered basis in the April and May billing periods as cleared by the regulator.

Meralco said the generation charge increase for March is supposedly at P0.92 per kWh.

Under its proposal to defer portions of the generation charge, P0.52 per kWh increase will be implemented this month and the remaining P0.40 per kWh will be staggered in April and May billings.

Meralco, however, said those rates still exclude the impact of taxes and system loss.

For this month, if taxes and system loss will be added, the increase will be equivalent to P0.62 per kWh, the power distributor said.

Meralco said it would announce on Friday the final rate adjustment for March.

The generation charge accounts for more than half of the electric rate.

It is a pass-through charge that is paid to the power suppliers. Meralco only earns from distribution, supply, and metering charges.

Meralco’s generation costs are usually influenced by the exchange rate, the supply-demand situation and its effect on electricity spot market prices, and international fuel prices.

The ERC said it has been informed by Meralco of the implementation of a deferred collection to cushion the impact of increases in generation charges.

The ERC said such increase shall be subject to further validation by the commission as to compliance with the underlying power supply agreements and substantiation of any fuel pass through component, as applicable.

Meralco said the escalation of prices in the Wholesale Electricity Spot Market (WESM) contributed to the rise in the generation charge in its franchise area for the February supply month.

Its suppliers also had to use more expensive alternative fuels to ensure the continuous supply of electricity.

“To recall, the generation charge reduction in February was largely due to two factors.  One, there was minimal use of expensive alternative fuel by the First Gas plants.  Two, the supply situation improved so that the secondary price cap was not triggered for an entire month, the first time this happened since October 2021,” Meralco vice president and head of utility economics department Lawrence Fernandez told The STAR last weekend.