Higher transmission charge pushes Meralco power rates up in February

(This is a press release from the Manila Electric Company.)

MANILA, Philippines – Following back-to-back reductions in power rates, the Manila Electric Company (Meralco) announced on Tuesday, February 10, an upward adjustment of P0.2226 per kilowatt-hour (kWh) in electricity rates this February, bringing the overall rate for a typical household to P13.1734 per kWh this month from P12.9508 per kWh last January.

For residential customers with a typical consumption of 200 kWh, this adjustment translates to an increase of around P45 in their total electricity bill.

Overall increase mainly due to higher transmission charge

The main driver of this month’s rate increase was the higher transmission charge as it went up by P0.1975 per kWh for residential customers.

This was due to a significant increase in ancillary service charges from the Reserve Market incurred by the National Grid Corporation of the Philippines (NGCP) and higher power delivery service charges.

Also contributing to this month’s upward adjustment was the P0.0770 per kWh increase in Universal Charge for Missionary Electrification (UCME). This followed the approval of the Energy Regulatory Commission (ERC) of a new total rate of P0.2763 from P0.1993 per kWh previously — implemented beginning the February billing. The UCME is collected from all on-grid electricity end-users to subsidize electricity costs in remote areas not connected to the main transmission grid.

Similarly, other charges — including taxes — had a net increase of P0.0554 per kWh.

Lower generation charge tempers February increase

The generation charge tempered this month’s increase as it went down by P0.1073 per kWh to P7.6398 per kWh, owing to lower costs from Independent Power Producers (IPPs).

Charges from IPPs went down by P0.8108 per kWh mainly due to the decrease in fixed fees of First Gas-Sta. Rita, following completion of the collection of fees in connection with the ERC’s confirmation of the computation method of First Gas Power Corporation under the interim extension of its contract with Meralco. Also contributing to the decrease was a reduction in the price of Malampaya natural gas, resulting from its quarterly repricing.

The reduction in IPP charges offset a P1.5682 per kWh increase in charges from the Wholesale Electricity Spot Market (WESM) and a P0.0483 per kWh increase in charges from Power Supply Agreements (PSAs).

Charges from WESM increased due to tighter supply conditions in the Luzon grid as average capacity on outage increased by about 973 MW.

On the other hand, lower PSA dispatch due to the planned maintenance shutdown of Excellent Energy Resources Inc. and South Premiere Power Corp. pushed up PSA charges. The scheduled maintenance during the supply month was done in preparation for the seasonal increase in demand during the dry season. The generating units of both plants that were on scheduled outage went back online by mid-January. 

IPPs, WESM, and PSAs accounted for 24%, 10%, and 66%, respectively, of Meralco’s total energy requirement for the period.

Pass-through charges for generation and transmission are paid to the power suppliers and the grid operator, respectively, while taxes, universal charges, and renewable energy subsidies are all remitted to the government.

Meralco’s distribution charge, on the other hand, has not moved since the P0.0360 per kWh reduction for a typical residential customer in August 2022.

New uniform national lifeline subsidy for low-income electricity consumers

In another development, the ERC recently mandated a new uniform national lifeline consumption threshold for marginalized and low-income households, including members of the Pantawid Pamilyang Pilipino Program (4Ps).

This means that qualified customers with consumption of 50 kWh or less will get 100% discount on their electricity rates.

Meralco will likewise continue to implement its existing lifeline discounts beyond the national threshold, granting a 35% discount for qualified customers consuming 51 to 70 kWh and a 20% discount for those consuming 71 to 100 kWh.

The ERC has also set the uniform national lifeline subsidy rate at P 0.01 per kWh. The new lifeline subsidy rate will take effect in the March billing, while the new discount structure will be effective in the April billing.

“We welcome this directive from the ERC which we hope will provide additional relief to our qualified customers,” said Meralco Vice President and Head of Corporate Communications Joe R. Zaldarriaga. – Rappler.com