Tight supply, weak peso push up Meralco’s November rates | Inquirer Business

Tight supply, weak peso push up Meralco’s November rates

By: - Reporter / @daxinq
/ 04:24 PM November 09, 2017

Publicly listed utility Meralco on Thursday told customers in its franchise areas to expect higher electricity bills for the month of November due to an increase in the cost of power generation.

In a press statement, the country’s largest power distributor announced an increase of P0.3436 per kilowatt hour for a typical residential household, thus raising the overall rate from last month’s P9.2836 per kWh to P9.6272 per kWh.


The rate increase this month amounts to a P68.72 increase in the total bill of a typical residential household consuming 200 kWh.

“The November rate increase is mainly due to the P0.1925 per kWh increase in generation charge,” Meralco said.


Overall generation charge increased this November by P0.1925 per kWh, from P4.7155 per kWh in October to P4.9080 per kWh this month primarily due to higher charges on the Wholesale Electricity Spot Market (WESM) and the depreciation of the peso versus the dollar.

WESM charges increased by P0.4810 per kWh. Despite the reduction in Luzon power demand this month, spot market prices increased due to tighter supply conditions. The share of WESM purchases to Meralco’s total requirements this month was 15 percent.

Cost of power from Independent Power Producers (IPPs) and Power Supply Agreements (PSAs) registered increases due to the weakening of the peso against the US dollar.

“Peso depreciation had a much larger impact on IPP costs because around 97 percent of IPP costs are dollar-denominated,” Meralco said. “On the other hand, the impact of peso depreciation on PSA costs was moderated by a lower share of costs in US dollars at around 58 percent.”

The 0.2868 per kWh increase in the cost of IPPs may also be attributed to lower average plant dispatch due to the scheduled outage of San Lorenzo Module 50 for the entire supply month.

Despite higher fuel prices, the increase in cost of PSAs was tempered to P0.0076 per kWh due to improvement in average plant dispatch. The shares of IPPs and PSAs to Meralco’s total requirements stood at 41 percent and 44 percent, respectively.

Transmission charge of residential customers increased by P0.0860 per kWh due to higher NGCP ancillary service charges. Consequently, taxes and other charges also went up by P0.0651 per kWh this month.


Meralco’s distribution, supply, and metering charges, meanwhile, have remained unchanged for 28 months, after the registered reductions in July 2015.

Meralco reiterated that 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 NGCP. Taxes and other public policy charges like the FIT-All are collected by government. /je

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TAGS: bill, electricity, generation, Meralco, November, Peso, power, rates
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