Philippines Report

Higher generation charges slightly push up Meralco rates

Higher generation charges slightly push up Meralco rates

Customers of Manila Electric Co. (Meralco) would see a “slight” increase in their power bills in June after the company paid more for electricity it distributed during the month.

At the onset of rainy season, a typical household with monthly consumption of 200 kWh can expect a P16 increase in their June bill after the overall rate went up by P0.0798 per kWh.

In a statement, the country’s largest power distributor said the adjustment would have been higher had it not been for an ongoing refund in its distribution charges.  Those refunds started in March and will be credited in 24 months, helping offset higher power costs.

Explaining the uptick in rates, Meralco said generation charge this month climbed P0.0697 per kWh due to more expensive power from the Wholesale Electricity Spot Market (WESM), the main electricity market where the company sourced 6% of its energy requirement in June. Electricity costs in WESM increased by P1.6322 per kWh due to tight supply conditions in the Luzon grid, which was placed on Red and Yellow alerts earlier this month after demand from people battling summer heat outstripped available supply.

“As a result, WESM prices were persistently high for extended periods,” Meralco said.

But the increase in prices in WESM was tempered by cheaper power costs in Power Supply Agreements (PSAs) and Independent Power Producers (IPPs), which decreased by P0.0476 per kWh and P0.0037 per kWh, respectively, due to “improved average plant dispatch” and a stronger peso that brought down import costs.

At the same time, transmission charges, which represent bills paid to bring electricity from suppliers to Meralco so the latter can distribute energy to consumers, slightly went up by P0.0101 per kWh.

“As summer comes to a close, Meralco still continues to encourage energy efficiency and provide customers with tips for the household in order to better manage electricity consumption,” the company said.

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