Meralco: February rates up on higher cost of power output

by Riza Olchondra, February 10, 2015
from Philippine Daily Inquirer

MANILA, Philippines – Customers of the Manila Electric Co. (Meralco) will have to deal with an overall increase in power rates for February after three consecutive monthly reductions.

Meralco announced Tuesday that it would implement an increase of P0.84 per kilowatt-hour (kWh) for a typical household consumer of 200 kWh per month. This type, which comprises the majority of the utility firms’ customers, will be paying an additional P167.85 overall in the electricity bill this month of February, according to Meralco.

The increase was mainly brought about by an upward adjustment in the generation charge (which makes up the bulk of billing charges) due to more frequent power plant outages. Other factors include 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 (R.E.) projects.

“A new line item, called FIT-All (Renewable), was likewise added to the bill beginning this month. The distribution charge, however, did not register any movement,” Meralco said.

Seemingly, to console consumers on the increase, Meralco said that the overall rate of P10.51 per kWh for this month would be 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.

Whether consumers would appreciate the seemingly tempered increase remains to be seen, coming from overall rate of P9.67 per kWh in January 2015.

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

For the year 2014, SPPC-Ilijan, SMEC-Sual and TLI-Pagbilao had not fully utilized their respective outage allowances. Thus, they were able to operate more days, resulting in accelerated collection of their fixed annual capacity fees. The remaining unpaid amount of the fixed fees by the December supply month, was thus, greatly reduced, Meralco said.

Generation costs also went up due to the lower dispatch of many power plants. This was party attributed to the lower demand in the January supply month, which covered the Christmas holidays and the five-day holiday in NCR. The January 2015 supply month was likewise cooler (by six percent) compared to the December 2014 supply month. Lower dispatch means the per kWh rate of power produced by generators becomes more expensive, compared to higher dispatch which maximizes output.

Contributing also 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. IPP charge registered a net reduction of P0.08 per kWh.

Meanwhile, price trends from late 2014 to early 2015 saw the Wholesale Electricity Spot Market (WESM) prices register a net reduction of P1.15 per kWh.

The PSAs’, WESM’s, and IPPs’ share to 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 February 2015 billing will also reflect the new FIT-All (Renewable) charge of P0.04 per kWh, a uniform charge that will be billed to all on-grid electricity consumers nationwide in support of the Feed-in-Tariff Program.

The FIT-All charge will form part of the fund which the National Transmission Corp. or TransCo will use to pay the FIT-eligible R.E. developers for the energy they will produce. The FIT program is required under the Renewable Energy Act of 2008.

Meralco has been reminding the public that it does not earn from the pass-through charges, such as the generation and transmission charges.

“Payment for the generation charge goes to the power suppliers such as the plants selling to Meralco through the WESM and under the PSAs, as well as the IPPs. Payment for the transmission charge, meanwhile, goes to the NGCP,” Meralco said. It noted that of the total bill, only the distribution, supply, and metering charges go to the distribution utility.

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