Power rates to rise on peso, coal prices

by Alena Mae S. Flores – September 28, 2016 at 11:30 pm

from Manila Standard Today

Weak peso and higher coal prices may push up the generation charges of Manila Electric Co., an official said Wednesday.

Meralco senior vice president and head of utility economics Lawrence Fernandez told reporters at the sidelines of a Senate hearing he could not say if these factors will be immediately reflected in the October generation charge.

“In the generation charge… after two successive reduction of overall electricity rate to households, we saw that electric rates declined to record lows. Now we are seeing that there are certain factors (that will) put pressure on generation cost,” Fernandez said.

Fernandez said many of the inputs to generation cost were dollar-denominated “so any depreciation of the peso can have an impact on the generation cost.”

The peso fell to its seven-month low of P48.25 to the dollar on Monday.

“Second, we noticed increases in coal price. If this continues, there’s a possible effect to the generation charge,” he said.

The bulk of Meralco’s power sources comes from natural gas at 46.2 percent and coal at 37.1 percent.

“This coming October, we do not have indications what the direction will be but we are continuing to monitor the fuel prices and the foreign exchange rates,” he said.

Meralco releases its generation charges usually during the first week of the month.

Fernandez said Meralco wass waiting for the billing of power suppliers “to see if they will already compute the forex effect and the more updated coal prices in their bills to us.”

“We’re now at record lows, I think the pressure is to keep it where it is. but there are already pressures for a slight increase in generation cost,” the official said.

Meralco consumers experienced slightly lower power rates in September as the residential rate for a typical household dropped P0.0451 per kilowatt-hour.

Residential rates decreased to P8.46 per kWh in September, which translated into a reduction of around P9 in the electricity bill of a household with monthly consumption of 200 kWh.

Meralco attributed the reduction to the downward movement in the transmission charge, which more than offset a higher generation charge.

Meralco’s rates declined in spite of the series of yellow and red alerts in late July to early August.

Luzon plunged to a series of yellow and red alerts starting July 26 to August 5 due to thin power reserves, as many power plants were on maintenance shutdown while others suffered technical problems forcing them to undergo a forced outage.

Meralco said the generation charge rose P0.0879 per kWh from last month’s P3.85 per kWh.

The cost of power from the independent power producers, meanwhile, increased by P0.17 per kWh due to the reduction in the operating hours of Quezon Power Philippines Ltd., which went on forced outage from August 5 to August 8, and those of First-Gas Sta. Rita after  scheduled maintenance from August 13 to August 14.