Meralco’s November rates up on tight supply, weak peso

Publicly listed utility Manila Electric Co. (Meralco) yesterday 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 statement, the country’s biggest power distributor announced an increase of P0.3436 a kilowatt hour for a typical residential household, thus raising the overall rate from last month’s P9.2836 to P9.6272 a kilowatt hour.

The rate increase this month amounted 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 a kWh, from P4.7155 in October to P4.9080 a kWh this month primarily due to higher charges on the Wholesale Electricity Spot Market (WESM) and the depreciation of the peso against the dollar.

WESM charges increased by P0.4810 a 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 electricity from Independent Power Producers (IPPs) and Power Supply Agreements (PSAs) registered increases due to the weakening of the peso against the 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-a-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 a 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.