Meralco’s force majeure petition seen to lower power rates in May

posted April 13, 2020 at 08:10 pm by Alena Mae S. Flores

https://manilastandard.net/index.php/business/power-technology/321455/meralco-s-force-majeure-petition-seen-to-lower-power-rates-in-may.html

Consumer group Laban Konsyumer Inc. said it expects lower power rates in May following the decision of Manila Electric Co. to invoke the force majeure provision in power supply agreements.

LKI president Victorio Mario Dimagiba appealed in a letter to Philippine Independent Power Producers Association Inc. president and executive director Anne-Estorco-Montelibano “to ensure that gencos [generation companies] accept the force majeure claim of Meralco and other utilities and cooperatives.”

Dimagiba sent the letter after Meralco announced a slight increase in power rates in April because of the normalization of the universal charge rate. The overall rate for a typical household rose by P0.1050 per kilowatt-hour to P8.9951 per kWh in April from P8.8901 per kWh in March.

Meralco said the slight adjustment this month was not due to an increase in the cost of producing and delivering electricity, but mainly due to the universal charge returning to its normal level following a one-time refund of P0.1453 per kWh in universal charge-stranded contract costs of National Power Corp.

Dimagiba said distribution utilities like Meralco availed of remedies available under Energy Regulatory Commission approved PSA to protect consumers.

He said the Meralco invoked the provision in its PSA for the April rates which covers only 10 days of the enhanced community quarantine.

“The full 30-day lockdown shall be reported in the May rate report. We believe the bigger relief of peso per kWh shall be passed on to the consumers at that time,” Dimagiba said.

Meralco’s invocation of the force majeure provision, however, helped temper the universal charge increase, reducing fixed charges for generation capacity that was not consumed.

The increase in universal charge was also tempered by the P0.0495-per-kWh decrease in the feed-in-tariff allowance for April, as the ERC ordered a one-month deferral of the FIT-All in consideration of the current ECQ.

Meralco’s generation charges for April declined to P4.6385 per kWh from P4.6632 per kWh in March.

“Due to the significant reduction in power demand in its service area during the enhanced community quarantine period, Meralco invoked the force majeure provision in its PSAs for the duration of the lockdown, reducing fixed charges for generation capacity that was not consumed,” the power retailer said.

Meralco said without the force majeure claim, the generation charge would have increased by P0.0259 per kWh from last month’s rate.

Charges from the Wholesale Electricity Spot Market decreased by P0.9429 per kWh, driven by improved supply conditions in the Luzon grid. Average capacity on outage decreased in March with the return to normal operations of plants that were on scheduled maintenance last month.

Meanwhile, demand for power in Luzon increased in March on higher consumption before the start of the ECQ. Meralco sourced 11 percent from the WESM, the country’s trading floor of electricity.

The cost of power from Meralco’s independent power producers also decreased by P0.0965 per kWh on higher average plant dispatch and peso appreciation, while the increase in PSA charges was tempered by Meralco’s force majeure claim, lowering it to only P0.1696 per kWh.

IPPs and PSAs accounted for 38 percent and 51 percent of total supply, respectively.

Meanwhile, transmission charges registered a slight increase this month by P0.0002 per kWh because of higher ancillary charges, while taxes and other charges registered a net increase of P0.1295 per kWh, mainly due to the normalization of universal charge.