Meralco hikes power rates as oil firms raise gas prices

by Lenie Lectura, February 10, 2015
from BusinessMirror

AN upward adjustment in power rates was announced by the Manila Electric Co. (Meralco) on Tuesday, the same day when oil firms implemented a hefty price hike in gasoline products.

Electricity bills are going up this month by P0.84 per kilowatt-hour (kWh), or by P168, for Meralco customers with a monthly consumption of 200 kWh.

Meralco said all bill components for February will shoot up to P10.51 per kWh. The upward adjustment also translates to an increase in overall power rates by P252 for consumers with a monthly consumption of 300 kWh; P336 for 400 kWh; and P420 for 500 kWh.

Still, the overall P10.51-per- kWh rate is still lower compared to rates 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.

A Meralco bill is made up of many charges. The largest component is the generation charge, or the portion of the bill that goes to the generation companies or power producers. This went up by P0.52 per kWh to P5.24 per kWh.

The increase in generation charge was mainly due to a P1-per-kWh increase in the rates of generation companies under the Power Supply Agreement (PSA), as capacity fees normalized from a low level in the preceding 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.

Generation costs also went up due to the lower dispatch of most generation companies. This could, in part, be attributed to the lower demand in the January supply month, which covered the Christmas holidays and the five-day holiday at the National Capital Region. The January 2015 supply month was, likewise, cooler compared to the December 2014 supply month.

Contributing also to the lower dispatch levels were the scheduled outages of Masinloc and Quezon Power, and the forced de-rating of Ilijan.

The effects of the lower dispatch levels was partly mitigated by lower fuel prices, 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.

Higher incidence of scheduled and forced outages of generating plants during the January supply month, likewise, had an upward pressure on Wholesale Electricity Spot Market (WESM) prices. However, the higher trading
prices in the WESM were offset by a reduction of billing adjustments from prior months, so that WESM charges registered a net reduction of P1.15 per kWh.

The PSA, WESM and IPP share Meralco’s power requirements, pegged between 47 percent and 49. 4 percent.

In addition to the generation charge, the transmission charge also went up by P 0.12 per kWh to P0.99 per kWh. This was brought about by the increase in both the wheeling and ancillary charge components of the National Grid Corp. of the Philippines’s (NGCP) billing. Taxes also went up by around P0.08 per kWh to P1 per kWh, while other charges such as system loss charge and lifeline subsidy increased by P 0.08 per kWh to P0.55 per kWh and P0.14 per kWh, respectively.

The February 2015 billing will also reflect the new FiT-All (Feed- in Tariff) charge of P 0.04 per kWh, a uniform charge that will be billed to all on-grid electricity consumers nationwide in support of the Feed-in-Tariff Program.

This charge will form part of the fund which the National Transmission Corp. will use to pay the FiT-eligible  renewable-energy  developers for the energy they will produce. The FiT Program is a mandate under Section 7 of the Renewable Energy Act of 2008.

Meralco reiterated 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. Of the total bill, only the distribution, supply  and metering charges accrue to Meralco.

Distribution charge remained at P2.20 per kWh.

Meanwhile, oil firms separately announced a P2.40-per-liter increase in gasoline products, P2.15 per liter for kerosene, and P1.9 per liter for diesel. The price hike took effect at 6 a.m. of February 10.

Oil firms said the upward adjustment reflects movements in the international oil market.

Asian benchmark Dubai crude rose by an average of $7.50 per barrel last week over the previous week. The surge can be attributed to weak US economic data and the announcement of oil majors that they will cut capital expenditures for 2015.

For February, Dubai crude is averaging $52 per barrel versus the January average of $45.50 per barrel, a 14-percent increase.

Moreover, MOPS (Mean of Platts Singapore) gasoline increased by $8.50 per barrel last week versus the previous week’s average.

Gasoline is averaging nearly $66 per barrel in February versus January’s full-month average of just over $57 per barrel.

Asian diesel prices, meanwhile, increased by an average of $6 per barrel last week versus the previous week. The increase was supported by lower stockpiles in Japan and demand from other Asian countries ahead of maintenance turnarounds at several refineries.

Since the start of the second semester of 2014 when international oil prices started to drop until the first week of February 2015, gasoline and diesel have decreased between P18 and P19 per liter.

And since the year started, gasoline prices have decreased four times totaling P3.60 per liter, while diesel has been rolled back five times amounting to a total rollback over P4 per liter.

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