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Meralco adjusts June power rates

Power rates for residential customers of the Manila Electric Company (Meralco) will go up this month by P0.0798 per kilowatt hour (kWh), or about P16 for those consuming 200 kWh.

The slight upward adjustment this June is a result of higher charges in the Wholesale Electricity Spot Market (WESM).  However, this month’s overall rate is still lower than last year’s rate by P0.0534 per kWh and also the lowest rate for June since 2018.

Generation charge for June stood at P4.6171 per kWh, a slight P0.0697 per kWh increase from last month’s P4.5474 per kWh.

WESM charges increased by P1.6322 per kWh due to tight supply conditions in the Luzon grid. With the increase in temperature and economic activity, demand in the grid increased by 1,131 megawatts from 10,425 MW in April to 11,556 MW in May.

The Luzon grid was placed on Yellow Alert on May 5 due to insufficient operating reserves as average capacity on outage remained at the 3,000 MW level. In the same period last year, capacity on outage was around 2,700 MW.  As a result, WESM prices were persistently high for extended periods, triggering the imposition of the secondary price cap from May 4 to 7 and then again from May 20 to 22.

The increase in WESM charges was mitigated by the lower charges from the 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 peso appreciation.

PSAs and IPPs provided 52 percent and 42 percent of Meralco’s energy requirement this month, respectively.  Meanwhile, the share of WESM further declined to 6 percent.

Transmission charge, taxes, and other charges for residential customers also registered a slight increase of P0.0101 per kWh.

Meanwhile, collection of the Universal Charge-Environmental Charge amounting to P0.0025 per kWh remains suspended as directed by the Energy Regulatory Commission (ERC).

The distribution, supply, and metering charges, meanwhile, have remained unchanged for 71 months, after these registered reductions in July 2015. Meralco said 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 Corporation of the Philippines. Taxes and other public policy charges like the Universal Charges and the FIT-All are remitted to the government.

The increase this month was tempered by Meralco’s continued implementation of the Distribution Rate True-Up refund, which began March 2021. The ERC provisionally approved Meralco’s proposal to refund around P13.9 billion over a period of 24 months or until the amount is fully refunded.

This amount represents the difference between the Actual Weighted Average Tariff and the ERC-approved Interim Average Rate for distribution-related charges for the period July 2015 to November 2020.  For residential customers, the refund rate is P0.2761 per kWh and appears in customer bills as a line item called “Dist True-Up.”

Meralco continues to encourage its over 7 million customers to practice energy efficiency initiatives at home to help manage their consumption.

Image courtesy of (c) Marcelomayo | Dreamstime.com
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