THE Manila Electric Co. (Meralco) on Tuesday said power rates in February could go up after seeing two consecutive months of decrease in overall electricity rates.
“We may recall that the January generation-charge reduction was largely due to lower capacity fees following the annual reconciliation of outage allowances. As in prior years, we expect capacity fees of PSAs [power-supply agreements] to normalize in February. Hence, we see an uptick in the generation charge next month, though we still need to await final supplier bills to see the effect of such factors as WESM [Wholesale Electricity Spot Market] charges, foreign exchange rate, fuel prices and others,” Meralco Utility Economics head Lawrence Fernandez said.
Last month charges from PSAs registered a decrease of P0.9810 per kilowatt-hour (kWh). The lower PSA charges were brought about by a reduction in capacity fees as a result of the annual reconciliation of outage allowances done at the end of each year under the PSAs agreements approved by the Energy Regulatory Commission. The reduction in capacity fees of generator companies represents savings immediately passed on to consumers by way of lower electricity rates.
The capacity fees from PSAs are expected to return to normal levels after the downward adjustment last month. PSAs provided 40 percent of Meralco’s total energy requirement during the December supply month, which was reflected in the January bills of consumers.
Aside from lower capacity fees last month, WESM charges also decreased by P1.6943 per kWh due to lower spot prices resulting from a reduction in power demand in the Luzon grid. The share of WESM purchases to Meralco’s total requirement in January was 19 percent.
On the other hand, charges from the Independent Power Producers (IPPs) increased by P0.3808 per kWh due to lower average plant dispatch. The share of IPP purchases to Meralco’s total requirement in January was at 41 percent.
Overall, power rates last month went down by P0.5260 per kWh, mainly due to a P0.5277 per-kWh reduction in the generation charge, which decreased from P4.6045 per kWh in December last year to P4.0768 per kWh in January this year.
Separately, power rates in February are expected to go up by 8 centavos per kWh as a result of the new Tax Reform for Acceleration and Inclusion law. “We estimate that the effect of the value-added tax on transmission would be 7-c/kWh, while the effect of the excise tax on coal would be 1-c/kWh, for a total of 8-c/kWh,” Fernandez said.