FILE PHOTO: Meralco logo. INQUIRER/Edwin Bacasmas
MANILA, Philippines — Customers of Manila Electric Co. (Meralco) may have to brace themselves for higher power bills this month as the power distributor has hinted at another increase in electricity rates.
In a statement on Monday, Joe Zaldarriaga, vice president and spokesperson for Meralco, said pressure to increase rates in June was rising.
“This is expected to be driven by the settlement costs in the reserve market and increase in feed-in-tariff allowance (FIT-All) that will be reflected in the bills of customers this month,” he said.
To recall, the Energy Regulatory Commission (ERC) partially lifted the suspension on settling transactions in the reserve market to allow generation companies to recover a portion of their costs in providing power reserves.
READ: Meralco sets P92 hike for 200 kWh in May
With the ERC ruling, power generators would be able to recover P1.7 billion or an initial 30 percent of P5.7 billion worth of trading transactions at the reserve market.
FIT-All rate
Grid operator National Grid Corp. of the Philippines previously estimated this would translate to an increase of more than 10 centavos per kilowatt-hour although the amount to be collected from customers would vary among distribution utilities and electric cooperatives.
On top of this, Meralco said the ERC recently approved a higher FIT-All rate starting this month, resulting in an increase of P0.0474 per kilowatt-hour (kWh).
READ: ERC eases WESM trading curbs
FIT-All is one of the charges in an electricity bill used to incentivize developers to build cleaner sources of energy.
Zaldarriaga also said the generation charge might go up following the tight power supply in the Luzon grid.
“We’ve experienced a series of red and yellow alerts in the last supply month, and as we know, these conditions affect generation costs particularly that in the Wholesale Electricity Spot Market or WESM,” he added.
Through WESM, power generators can sell excess capacity while distributors can buy additional power if necessary. WESM charges are integrated into a customer’s electricity bill.
WESM charges
Historical data show that WESM prices are high during the summer season as the demand for electricity increases, but supply also tightens during this period because of the unavailability of some power plants.
Furthermore, Meralco said the peso depreciation, which increases the expenses of independent power producers and affects power supply agreements, is also expected to contribute to higher generation charges in June.
Last month, Meralco announced a P0.46 per kWh increase in overall power rates following a steep drop of almost one peso per kWh in April, largely due to the generation charge which was then driven by higher costs from the WESM.
In a separate development, the Private Electric Power Operators Association (Pepoa) signified its support for renewing Meralco’s franchise owing to the company’s track record.
“Its track record shows that Meralco has provided reliable electricity that served as the backbone of businesses and enhanced the quality of life for millions of Filipinos,” Pepoa president Ranulfo Ocampo said in a letter to Parañaque City 2nd District Rep. Gustavo Tambunting.
“Its dedication to operational excellence and resilience demonstrates its firm resolve to reduce system losses and the duration and frequency of power interruptions that greatly benefitted electricity end-users,” Ocampo told Tambunting, chair of the House committee on legislative franchises.
Ocampo said the combined efforts of distribution utilities under Pepoa and Meralco have been crucial in “swiftly” restoring power and maintaining stability in regions affected by typhoons and natural calamities.
“Meralco’s invaluable assistance in sharing its resources to typhoon-ravaged regions in the Philippines has alleviated the sufferings of millions of affected customers,” he added.
Moreover, the group said the power retailer exhibited a “strong dedication” to social responsibility and universal service by making substantial progress towards the goal of 100 percent household electrification.