October Meralco rates rise on higher generation charge

By Lenie Lectura - October 9, 2019

https://businessmirror.com.ph/2019/10/09/october-meralco-rates-rise-on-higher-generation-charge/

ELECTRICITY rates in October increased to P9.0862 per kWh from last month’s P9.0414 per kWh, mainly due to higher generation charge recorded for the supply month of September.

The Manila Electric Co. (Meralco) said Tuesday the upward adjustment of P0.0448 per kWh will mean an increase of around P9 in the typical household’s total bill.

Generation charge, which makes up around 50 percent of the consumers’ electric bill inched up to P4.5406 per kWh from P4.5191 per kWh last month.This was brought about by a smaller net settlement surplus (NSS) refund.

It may be recalled that part of the P0.52 per-kWh rate reduction last September was due to the almost P700-million NSS refund, which the Energy Regulatory Commission (ERC) directed the Philippine Electricity Market Corp. (PEMC) to implement.

The refund amount for October is smaller at around P381 million.

Other factors affecting generation rates include Wholesale Electricity Spot Market prices, charges from independent power producers (IPPs) and power-supply agreements (PSAs). Meralco said the supply situation improved and WESM prices were generally lower.

“WESM charges decreased by P0.5290 per kWh driven by an improved power-supply situation in the Luzon grid as there were fewer power plants on outage during the supply month,” Meralco said.

The share of WESM to Meralco’s supply needs remained at 17 percent.

The cost of power from IPPs decreased by P0.1512 per kWh due to a strengthening of the peso against the US dollar. Around 97 percent of IPPs costs are dollar-denominated.

IPPs and PSAs provided 40 percent and 43 percent, respectively, of Meralco’s supply needs.

Meralco said WESM and IPP charges partly offset PSA charges, which increased by P0.3694 per kWh mainly due to lower average plant dispatch.

Transmission charge also increased by P0.0249 per kWh as a result of higher ancillary service charges, while taxes and other charges registered a decrease of P0.0016 per kWh.

Meralco’s distribution, supply, and metering charges, meanwhile, have remained unchanged for 51 months, after these registered reductions in July 2015.

Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the National Grid Corp. of the Philippines.

Taxes and other public policy charges, like the FiT-All rate are remitted to the government.