End of refund program prompts Meralco to hike June power rate

By Lenie Lectura

THE Manila Electric Company

(Meralco)

will implement a P0.4183 per kilowatt hour (kWh) increase in the electricity rate this June, bringing the overall rate for a typical household to P11.9112 per kWh from May’s P11.4929 per kWh.

For residential customers consuming 200 kWh, the adjustment is equivalent to an increase of around P84 in their total electricity bill. This month’s overall rate increase was brought about by the completion of the last distribution-related refund in May equivalent to P0.8656 per kWh for residential customers, the impact of which will be felt in the June bills.

To recall, from March 2021 until May 2023, Meralco implemented four Distribution Rate True-Up (DRTU) adjustments totaling P48.3 billion which translated to about P1.8009 per kWh refund for residential customers.

“These refunds benefitted Meralco’s customers over the past two years as these helped temper increases in electricity bills at a time of financial distress and uncertainty for many,” Meralco Head of Regulatory Management Office Atty. Jose Ronald V. Valles said.

Despite this, this month’s rate increase was tempered by the generation charge, which went down by P0.4195 per kWh from P7.6697 per kWh in May to P7.2502 per kWh this month due to lower costs from Meralco’s Power Supply Agreements (PSAs) and Independent Power Producers (IPPs).

Meralco said this month’s generation charge no longer included recovery of deferred generation cost for the March bills.

Charges from PSAs and IPPs decreased by P0.5871 and P0.5854 per kWh, respectively, mainly due to improved average plant dispatch and lower coal prices.

These mitigated the P2.0187 per kWh increase in Wholesale Electricity Spot Market (WESM) charges due to tight supply conditions in Luzon.

The peak demand in May reached 12,431 MW, the highest so far on record. The grid was also placed on yellow and red alerts last May 8. Meralco said high spot prices triggered the imposition of the secondary price cap 28.28 percent of the time, compared to 22.16 percent in April.

The share of PSAs and IPPs to Meralco’s energy requirements during the period went up to 50 percent and 38 percent, respectively. Meanwhile,

WESM energy share was lower at 12 percent. This month’s transmission and other charges registered a net decrease of P0.0278 per kWh. Collection of the Feed-In Tariff Allowance (FIT-All) remains suspended until the August billing month in accordance with the ERC resolution extending the collection suspension for another six months starting March 2023.

Pass-through charges for generation and transmission are paid by Meralco to the power suppliers and the grid operator, respectively, while taxes, universal charges, and FIT-All are all remitted to the government.

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