Meralco sees hike in generation charge by P0.62 per kWh in March

As Filipinos brace for the summer heat, the Energy Regulatory Commission (ERC) announced that Manila Electric Co. (Meralco) would be implementing an increase in its generation charge in the next three months to cover P1.1 billion in generation costs arising from the Malampaya field shutdown in February.

The total adjustment should be P0.92 per kilowatthour but Meralco opted for its  staggered implementation .  In the March billing,  a P0.62 per kWh  increase  ((P0.52 in generation charge plus taxes and systems loss) will be reflected. The rest of the needed adjustment will be applied in April and May.

In a statement on Wednesday, the ERC said Meralco had proposed the deferred collection of the  P1.1 billion in generation charges.

“Such increase (P0.62 per kWh) shall be subject to further validation by the commission as to compliance with the underlying power supply agreements and substantiation of any fuel pass-through component, as applicable,” it added.

The deferred portion of the P1.1 billion in generation cost, equivalent to P0.40 per kWh, will be collected on a staggered basis in the April and May billings as cleared by the regulator, Meralco said in a Viber message.

The company clarified, however, that the total power rate increase for March–which would include other billing components, such as transmission charge– has yet to be finalized.

Generation charge is the cost of purchased power from suppliers and accounts for more than 50 percent of the total electricity bill.

A typical household consuming 200 kWh may expect a total rate increase of P1.11 per kWh once other billing components, such as systems loss and taxes, are included, the ERC said.

Meralco earlier explained that the two-week maintenance shutdown of the Malampaya gas field largely influenced the electricity rate hike.

The closure forced the Sta. Rita and San Lorenzo power plants, which both sell electric output to Meralco, to use “more expensive” alternative fuel. In the event that natural gas plants shut down, the two plants can run on alternative fuel, such as liquid fuel, to ensure supply delivery.

Meralco added that the shutdown also affected supply in the Luzon grid, which led to higher bid prices in the spot market.

The projected rate increase comes after Meralco reduced the February electricity rate by P0.0106 per kWh.