Home Editors' Picks Power rates up in May as generation charge rises

Power rates up in May as generation charge rises

Electricity rates will go up in May, according to the Manila Electric Co. (Meralco). — PHILIPPINE STAR/MICHAEL VARCAS

RESIDENTIAL CUSTOMERS in areas served by Manila Electric Co. (Meralco) will see higher power bills this month due to the increase in the generation charge.

Meralco in a statement said the overall rate for a typical household went up by P0.1761 per kilowatt-hour (kWh) to P11.49 per kWh in May from P11.32 per kWh in April.

Households that consume 200 kWh of electricity will see an increase of P35 in their May electricity bills. Meanwhile, those consuming 300 kWh, 400 kWh, and 500 kWh would see an increase of P53, P70, and P88, respectively.

Joe R. Zaldarriaga, Meralco spokesperson and vice-president for corporate communications, said at a virtual briefing that higher spot market prices and power supply agreement (PSA) costs drove up generation charges this month.

The generation charge increased by P0.34 to P7.67 this month. This includes the collection of the final instalment of deferred charges, equivalent to P0.20.

In March, the Energy Regulatory Commission said Meralco had proposed to stagger the collection of an estimated P1.1 billion in generation charges in the April-to-May period to “cushion its impact” on consumers.

This month, wholesale Electricity Spot Market (WESM) charges went up by P1.74 per kWh to P8.92 per kWh as the secondary price cap was triggered 22% of the time in April.

Supply tightened in April as Luzon’s peak demand came in at 12,235 megawatts (MW), 732 MW higher than the peak demand in March.

WESM accounted for 18% of Meralco’s energy share for the month, significantly lower than 32% share in April.

Charges from PSAs, which account for 47% of Meralco’s supply, rose by P0.91 per kWh to P7.11 per kWh.

Meralco said the peso depreciation impacted 26% of PSA costs that were dollar denominated. The peso closed at P55.38 against the US dollar on April 28, losing P1.02 from its P54.36 close on March 31.

Mr. Zaldarriaga said that two of Meralco’s emergency PSA (EPSA) drove up the costs in May. Meralco had secured two EPSAs with South Premiere Power Corp. (SPPC) and Therma Luzon, Inc. with an implemented date of March 26 and April 12, respectively.

Charges from the independent power producers (IPPs), however, decreased by P1.40 per kWh to P7.63 per kWh. IPPs account for 35% of Meralco’s total requirement.

However, Mr. Zaldarriaga said this month’s rate hike was already tempered by a reduction in transmission charge by about P0.25 per kWh due to lower ancillary service charges.

Meanwhile, Mr. Zaldarriaga warned consumers to brace for more rate hikes in the coming months after the Energy department projected Luzon’s power demand to go as high as 13,125 MW in May.

“Both in terms of pricing and consumption, it tapers off by July. It is really for March to June when we expect an increase both in terms of consumption and price because all the factors usually come into play in those months,” Mr. Zaldarriaga said.

On Monday, the Luzon power grid was placed on red alert twice and on yellow alert once after Luzon’s demand hit 12,418 MW, the highest so far for this year. The supply instability affected the export of power to the Visayas grid, which was placed under yellow alert as a result.

Lawrence S. Fernandez, vice-president and head of utility economics of Meralco, said that with the looming El Niño, energy consumption is also expected to increase further.

“The potential impact of an El Niño event is elevated temperatures, or less rainfall which will affect hydro plants, higher temperatures will affect consumption,” he said.

The Philippines’ state weather bureau said on May 2 that El Niño would likely develop in the next three months and might last until the first quarter of next year.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Ashley Erika O. Jose