Meralco blames weak Peso, power outages for hike in July billing

By Lenie Lectura – July 2, 2017

from Business Mirror

GENERATION charge, a big chunk of an electric  bill, is expected to go up this month.

According to the Manila Electric Co. (Meralco), there are two factors that are expected to push generation charge up for the supply month of June. These are the Wholesale Electricity Spot Market (WESM) price and the depreciation of the peso.

“In the June supply month, we experienced events that placed upward pressure on generation costs,” said Joe Zaldarriaga, Meralco spokesman.

Zaldarriaga said the 600-megawatt (MW) Unit 2 of the Sual power plant went on forced outage beginning June 14, coinciding with the absence of Santa Rita Module 40 (250 MW), which was on scheduled maintenance.

“This 850-MW reduction in supply may have affected spot-market prices. For another, the peso depreciated in recent days to more than 50 to the dollar, versus 49.765 in May,” Zaldarriaga explained. “Both factors may have pushed up generation costs that may affect the July generation charge.”

Last month generation charge reflected in the consumers’ electric bills stood at P3.8586. This was lower by P1.0253 per kilowatt-hour (kWh), from P4.8839 per kWh in May. The decline in generation charge largely contributed to a lower June overall rate by P1.43 per kWh to P8.17 per kWh.

At P8.17 per kWh, the June overall rate is the second lowest since December 2009.

Contributing to the decrease in generation charge for the month of May, which is reflected in the June electricity bills,  are the P0.59-per-kWh decrease in the cost of power sourced from independent power producers (IPPs), the P1.25-per-kWh decrease in power sourced from the WESM and the P0.04-per-kWh decrease in power-supply agreements (PSAs) prices.  There was a reduction in IPP and PSA costs because of higher plant dispatch, continuous peso appreciation and the completion of the staggered recovery of liquid fuel cost that was incurred during the Malampaya maintenance shutdown from January 28 to February 16. The share of  IPPs and PSAs purchases to Meralco’s total requirements are 40.7 percent and 45.6 percent, respectively, Meralco had reported.

Additionally, a decrease in the cost of power supplied through the WESM is due to fewer plant outages despite higher power demand in Luzon. The share of the WESM stood at 13.7 percent.