Meralco consumers brace for hefty hike

by Riza Olchondra, February 11, 2015
from Philippine Daily Inquirer

MANILA, Philippines—After enjoying three consecutive months of rate reductions, customers of the Manila Electric Co. (Meralco) will be confronted with a quite substantial overall increase in electricity rates this February.

Meralco announced yesterday that it will be implementing an increase of P0.84 per kilowatt hour (kWh), which will push electricity rates up to P10.51 per kWh in February, against the overall rate of P9.67 per kWh in January 2015.

For a typical household consuming 200 kWh per month—which make up the majority of Meralco customers—this will mean paying an additional P167.85 overall in their electricity bill this February, Meralco said.

The increase was mainly brought about by an upward adjustment in the generation charge (which makes up the bulk of billing charges), brought about by more frequent power plant outages.

The increase was also ascribed to other factors like the adjustment from a low power rate baseline from the period November 2014 to January 2015 (three straight months of rate reductions) and higher rate components such as transmission, taxes and other charges, including a universal charge to fund incentives for renewable energy projects.

New line item

According to Meralco, a new line item, called the FIT-ALL, was added to consumers’ electricity bills starting this month, under a policy mechanism called the feed-in tariff program designed to accelerate investment in renewable energy technologies.

The FIT Allowance, or FIT-All, is a uniform charge similar to the universal charge that is imposed on all consumers who are supplied with electricity through a distribution or transmission network. The collection of the FIT rates will go into a fund which is to be used to provide incentives to pioneering renewable energy developers.

The new FIT-All charge of P0.04 per kWh is a uniform charge that will be billed to all on-grid electricity consumers nationwide.

The FIT-All fund is to be administered by the National Transmission Corp. (TransCo) which will use it to pay the FIT-eligible renewable energy developers for the energy they will produce. The FIT program is required under the Renewable Energy Act of 2008.

Still lower than last year

As if to console consumers, Meralco said the overall electricity rate of P10.51 per kWh this month is lower year-on-year compared to the rate in February 2014, which was at P11.04 per kWh.

“This month’s rates are likewise lower than the average for 2014, which was P10.72 per kWh,” Meralco said.

The generation charge went up by P0.52 per kWh, mainly because of a P1 per kWh increase in the rates charged by generation companies under power supply agreements (PSA) with Meralco compared to lower levels in the previous month.

Generation costs also went up because of the lower dispatch of many power plants. This was partLy attributed to the lower demand in the January supply month, which covered the Christmas holidays and the five-day holiday at the NCR. Lower dispatch means the per-kWh rate of power produced by generators becomes more expensive, compared to higher dispatch which maximizes output.

Also contributing to the lower dispatch levels were the scheduled outages of Masinloc and Quezon Power, and lower capacity from Ilijan, Meralco said.

The effects of the lower dispatch levels was partly mitigated by lower fuel prices (coal and natural gas), so that the fuel component from both PSAs and independent power producers (IPPs) went down. The IPP charge registered a net reduction of P0.08 per kWh.

Price trends

Meanwhile, price trends from late last year to early 2015 saw the Wholesale Electricity Spot Market (WESM) prices register a net reduction of P1.15 per kWh.

The PSA, WESM and IPP share of Meralco’s power requirements were at 49 percent, 4 percent and 47 percent, respectively.

In addition to the generation charge, the transmission charge also went up by P0.12 per kWh. This was brought about by the increase in both the wheeling (transmission) and ancillary (reserve power) charge components of the National Grid Corp. of the Philippines’ (NGCP) billing. Taxes also went up by around P0.08 per kWh, while other charges (system loss charge and lifeline subsidy) increased by P0.08 per kWh.

The distribution charge, however, did not register any movement, Meralco said, reiterating that it does not earn from the pass-through charges, such as the generation and transmission charges.

It noted that of the total electricity bill, only the distribution, supply and metering charges go to Meralco.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s