Home Economy Meralco warns power rates to go up in June

Meralco warns power rates to go up in June

Customers of Manila Electric Co. may face higher electricity bills this month. — PHILIPPINE STAR/MICHAEL VARCAS

POWER RATES are expected to go up this month, due to higher settlement costs in the reserve market and the implementation of the new feed-in tariff allowance (FIT-All) rate, according to Manila Electric Co. (Meralco).

A spike in generation charges amid tight supply, coupled with the peso depreciation, might also contribute to the higher electricity rates, the company said on Monday.

Meralco Vice-President and Spokesperson Joe R. Zaldarriaga said in a statement that there is “pressure for an upward adjustment” in electricity bills for June.

“This is expected to be driven by the settlement costs in the reserve market and increase in FIT-All that will be reflected in the bills of customers this month,” he said.

Last month, the Energy Regulatory Commission (ERC) ordered the partial lifting of the suspension on settlement amounts in the reserve market.

The ERC has allowed the settlement of 30% of the amounts due on reserve market transactions during the March billing month. Citing simulations, the regulator projected the partial payments to be worth P1.7 billion.

Meralco said the National Grid Corp. of the Philippines (NGCP) “can start recovering costs for trading transactions made in the reserve market in March.”

The NGCP has said ancillary services to distribution utilities might increase by more than 10 centavos per kilowatt-hour (kWh).

NEW FIT-ALL RATEMeanwhile, Meralco said the ERC recently approved a new FIT-All this month, which would result in an increase of P0.0474 per kWh.

“The increase was based on the application of Transco (National Transmission Corp.) as administrator of the fund and ERC’s determination of the funding requirement to pay for the electricity supplied by RE (renewable)-FIT plants,” ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said in a Viber message.

Ms. Dimalanta said the ERC approved a FIT-All rate of P0.0838 per kWh in March, which would be reflected in the June billing.

“The implementation of the new FIT-All is higher than the 2022 rate of P0.0364 per kWh,” Ms. Dimalanta said.

The FIT-All is a charge reflected in the bills of consumers that is collected from on-grid customers to support the development and promotion of RE.

Payments are remitted to the FIT-All fund established and administered by Transco, which keeps the funds with a government financial institution. The fund goes toward paying RE developers who have obtained fixed rates for electricity generated by their projects.

The ERC had lifted the suspension of FIT-All collection starting February due to a projected deficit in the FIT-All fund.

Mr. Zaldarriaga also said there is an upward pressure in the generation charge due to the continuing tight supply conditions in the Luzon grid.

“We’ve experienced a series of red and yellow alerts in the last supply month, and as we know, these conditions affect generation costs particularly in the Wholesale Electricity Spot Market or WESM,” he said.

As of June 3, the Luzon grid was placed on red and yellow alerts for 13 days and 29 days, respectively, this year.

In an advisory early Monday, the NGCP raised a yellow alert over the Luzon grid from 1-4 p.m. and 6-10 p.m. as a total of 2,692.8 MW were unavailable to the grid.

Meralco said the peso depreciation is also expected to increase generation charges in June, as it affects a significant portion of the costs of independent power producers and power supply agreements.

On Thursday, the peso fell to a near 19-month low, closing at P58.635 a dollar from P58.42 finish on Wednesday, data from the Bankers Association of the Philippines showed.

In May, Meralco raised the overall rate by P0.4621 to P11.4139 per kWh from P10.9518 per kWh in April due to the higher generation charge.

Households consuming 200 kWh had to pay about P92 more for their monthly bill.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — S.J.Talavera

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