Meralco rates to rise in August

MANILA, Philippines—Customers of Manila Electric Co. (Meralco),  the country’s biggest power distributor, can expect another increase in their electricity bills this month as the generation charge component has risen by 28 centavos per kilowatt hour to P6.7397.

This means that households consuming 100 kWh a month will be paying an additional P28, while those using up 200 kWh will have to pay P56 more beginning August. Households consuming 300 kWh and 400 kWh monthly will have to pay an additional P84 and P112, respectively.

Meralco explained in a statement that the increase in the generation charge this month was the result of the eight-day shutdown of the Malampaya gas pipeline, which affected one-third of the total power supply in Luzon in July.

The shutdown affected in particular three natural gas-fired power plants in Luzon—the 1,200-megawatt Ilijan, 1,000-MW Sta. Rita, and the 500-MW San Lorenzo facilities—which provide a total of 2,700 MW for the Luzon grid.

Volume reduction

According to Meralco, the Ilijan facility had to reduce the volume of electricity it was generating because of the Malampaya shutdown.

Given Ilijan’s limited operations, a bigger portion of the power requirements in the Meralco franchise area had to be obtained from the Wholesale Electricity Spot Market (WESM), whose power costs stood at P14.70 per kWh—making it the most expensive supply source for the power distributor.

Meralco said it sourced 12.6 percent of its total electricity requirements from the WESM last month, double the previous month’s 6.3 percent.

According to Meralco, it sourced 45.6 percent of its requirements from three independent power producers—the Sta. Rita and San Lorenzo gas plants and the Quezon Power Phil. Ltd.—which increased their rates by a combined 48 centavos per kWh to P5.58 per kWh.

Without the gas from the Malampaya offshore field, Sta. Rita and San Lorenzo, both owned by the Lopez Group’s First Gas, resorted to the use of more expensive liquid condensate fuel to ensure a continued generation supply to Meralco.

Quezon Power, meanwhile, experienced a number of outages, leading to a reduction in the volume of electricity it was able to deliver to Meralco.

Failure to offset

Meralco explained that the 66-centavo-per-kWh reduction in the cost of power sourced from the state-run generator, the National Power Corp. (Napocor), last month had failed to offset the increases in the WESM and IPP charges. Purchases from Napocor accounted for 41.7 percent of Meralco’s total power requirements in July.

“With better supply conditions this month (with Malampaya and the affected power plants back on line), and barring generation disruptions from the other large power plants, it is probable that the generation charge will be more favorable next month,” Meralco said.

The electric utility reiterated that it does not earn any money from the generation charge, a pass-through cost that goes directly to the power producers like Napocor, the three IPPs and other generators selling power through WESM.

Meralco said its own charges accounted for only 16 percent of the consumers’ total electricity bill.