The Manila Electric Co. (Meralco) is expecting the generation charge component in consumer power bills to increase this month, mainly due to the normalization of capacity fees of power supply agreements (PSAs).
“It [generation charge] will be higher than January,” said Meralco utility economics head Lawrence Fernandez.
In the past two or three years, generation charge for the first month of the year is lower. The reverse happens the following month. “There’s always normalization in February. The reduced capacity fees for the outage allowance reconciliation for the PSAs is reflected in January,” said Fernandez.
He explained that if power plants do not use their outage allowance for the year, “then by December they charge us lower or with not capacity fees and that leads to the lower generation charge in January.”
Generation charge makes up bulk of what consumers pay for their electricity.
Last month generation charge went down to P4.9119 per kilowatt-hour from P5.3303 per kWh. The decrease was mainly the result of a reduction in the cost of power from Meralco’s PSAs.
Fernandez also cited power-plant outage incidents that occurred in January. Whenever the plant outage is scheduled or not, such incident triggers a spike in the Wholesale Electricity Spot Market (WESM).
“We also noticed that during the second half of January there were many power-plant outage. More than 3,300 megawatts of capacity went on outage, both forced and scheduled outage. We noticed that the spot market responds accordingly that also led to affect the generation charge in February,” said the Meralco official.
Meralco is set to release February power rates next week.
Meralco rates last month decreased to P9.8385 per kWh from the previous month’s P10.1803.
Tax refund
The Department of Finance (DOF), meanwhile, announced that it has approved a Revenue Regulation (RR) that reduces to 15 percent the creditable withholding tax on refund for Meralco customers in line with the Tax Reform for Acceleration and Inclusion law.
In a news statement issued on Monday, Finance Secretary Carlos G. Dominguez III approved the RR in line with reducing to 15 percent the 25- to 32-percent creditable withholding tax for the refund paid to Meralco, effective January 1, 2019.
The RR will be issued by the Bureau of Internal Revenue, with Assistant Commissioner Marissa O. Cabreros pointing out that the regulation is for uploading once the DOF transmits it to the bureau.
With Rea Cu