Consumers of Manila Electric Co. (Meralco) are facing higher electricity rates in January by P0.6232 per kilowatt-hour due to higher generation charges and the completion of the distribution-related refund.
This developed as Meralco assured that it is working with the energy industry stakeholders to avoid any power supply shortage in May where the entire month is expected to have yellow alerts or thin power reserves.
Meralco’s overall rate for a typical household went up to P10.9001 per kWh this month from P10.2769 per kWh in December.
Residential customers consuming an average of 200 kWh can expect an increase of around P125 in their total electricity bill.
Meralco vice president and spokesman Joe Zaldarriaga said the generation charge went up by P0.3316 to P7.1291 from P6.7975 per kWh the previous month.
He said charges from the independent power producers were higher by P0.4070 per kWh due to the increased use of more expensive alternative fuel by First Gas Sta. Rita and San Lorenzo amid the insufficient Malampaya gas supply.
Zaldarriaga said the peso’s appreciation, which affected 97 percent of IPP costs that are dollar-denominated, mitigated a further increase in power rates.
IPPs provided 46 percent of Meralco’s energy requirement in December. Zaldarriaga said charges at the Wholesale Electricity Spot Market, the trading floor of electricity, increased by P0.6808 per kWh as the increase in generation outages more than offset the decrease in power demand in the Luzon grid in December.
“The grid was placed under yellow alert for three days in December due to the tight supply conditions, and the persistently high spot prices triggered the imposition of the secondary price cap 61 percent of the time, compared to 21 percent in November,” Zaldarriaga said.
Meralco sourced 9 percent of its requirements from the WESM from 7 percent the previous month due to the suspension of its 2019 power supply agreement with South Premiere Power Corp. starting Dec. 7, 2022, for 670-MW baseload supply.
The supply suspension was brought about by the implementation of a Court of Appeals Temporary Restraining Order prompted Meralco to partially source replacement power from WESM.
Meralco executed an emergency power supply agreement with GNPower Dinginin Ltd. on Dec. 15, 2022, until Jan. 25, 2023, for 300-MW baseload capacity to partially replace SPPC capacity.
“Meralco was constrained to source the remaining 370-MW from WESM following the lack or withdrawal of offers for emergency supply from other power generation companies,” Zaldarriaga said.
Charges from Meralco PSAs went down by P0.2710 per kWh due to the higher share of excess energy deliveries, which are priced at a discount, and the appreciation of the peso against the dollar.
Around 36 percent of PSA costs are dollar-denominated. PSAs provided 45 percent Meralco’s total energy requirement in December. Zaldarriaga said also contributing to this month’s overall rate increase is the completion of a distribution-related refund equivalent to P0.2761 per kWh for residential customers. He said two ongoing refunds totaling P1.0579 per kWh for residential customers are still being implemented by Meralco and continue to temper customers’ monthly bills.
These refunds are expected to be completed by January and May, and the impact will be felt in the succeeding billing periods.
Transmission charges for residential customers decreased by P0.0314 per kWh due to lower Ancillary Service charges. Taxes and other charges registered an upward adjustment of P0.0469 per kWh.
Collection of the feed-In tariff allowance remains suspended following the issuance of the Energy Regulatory Commission’s resolution halting the collection of P0.0364 per kWh for three months from December 2022 to February 2023.
Meralco vice president and head of utility economics Lawrence Fernandez said they are working with the entire industry “with the tools available to us to try to mitigate the impact of the expected supply tightness.”
“In coordination with all stakeholders sa power sector, Meralco has been cooperating with the DOE for various measures to mitigate the effects of the potential tight supply especially for summer 2023,” Fernandez said.
He said that for the supply side, Meralco is conducting two biddings for short-term PSAs totaling 480 MW.
“Hopefully, that will help Meralco customers be shielded from spot market prices,” Fernandez said.
He said Meralco is collaborating with the Department of Energy for a communications plan for energy efficiency and also to attract more large end users to join the interruptible load program.
The program allows large power users to de-load from the grid and use their generating sets to free up capacity from the grid.
“End users need to be efficient tapos supply side, and the new capacities will have to come in on time as demand increases. We have to work on both sides of the equation so customers will have reliable supply 24 hours,” Fernandez said.
