Weak peso pushes Dec. electricity rates up

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After four months of declines totaling P0.35, the Manila Electric Co. said on Wednesday there would be an increase this December in the power rate by P0.1011 per kilowatt-hour (kWh) for typical households, thus raising its price to P8.36 per kWh.

This translates to an increase of around P20 in the total electricity bill of a household with a monthly consumption of 200 kWh.  The increase is due mainly to the upward movement in the generation charge.

The jump resulted mainly from a significant weakening of the peso against the US dollar.  From a level of 46.580:$1 in August, the peso depreciated to P48.405 in October, and further to P49.73 in November.

Meralco—the country’s largest electricity distributor—said, however that this month’s overall rate was still lower by P0.25 per kWh compared to December 2015’s P8.61 per kWh.

The firm said there was an increase in the generation charge in December, which is P0.0915 per kWh higher than last month’s P3.8436 per kWh.

At P3.9351 per kWh, the generation charge is P0.1948 per kWh lower compared to December 2015’s P4.1299 per kWh.

Partly because of the weaker peso, the cost of power from independent power producers (IPPs), whose billings are around 96 percent dollar-denominated, increased by P0.2615 per kWh. The increase was also due to lower dispatch with the scheduled maintenance of Sta. Rita Module 30 during the whole supply month. The share of the IPPs to Meralco’s total requirements for November was at 36.4 percent.

Cost of power sourced from plants under power supply agreements (PSAs) also increased by P0.2214 per kWh mainly due to higher fuel cost. PSA billings are likewise affected by peso depreciation as around two-thirds of their costs are dollar-denominated. The share of PSAs stood at 40.8 percent.

Overall charges from the Wholesale Electricity Spot Market (WESM) nonetheless decreased by P0.3734 per kWh, which partly mitigated the higher charges from the IPPs and PSAs. Spot prices have remained low in November because of lower demand and fewer outages compared to last month. The share of WESM purchases to Meralco’s total requirements went up from 20.1 percent to 22.5 percent.

There was also an increase in the transmission charge of residential customers by P0.0031 per kWh, mainly due to the slight increase in the ancillary service charges.

Taxes and other charges also increased by a combined amount of P0.0065 per kWh.

Meralco’s distribution, supply, and metering charges, meanwhile, have remained unchanged for 17 months. Meralco  does not earn from the pass-through charges, such as the generation and transmission charges.