The customers of Manila Electric Company (Meralco) will have to brace for higher electric bills this month, as the utility firm’s overall tariff had been up by P0.2353 per kilowatt hour to P8.9071 per kWh versus P8.6718 per kWh in June.

For residential end-users in the typical consumption bracket of 200 kilowatt-hours, this will amount to aggregate increase of P47 in this billing cycle.

The power firm said the upward adjustment had been “mainly a result of persistently high charges in the Wholesale Electricity Spot Market WESM)” — as based on settlement prices logged in the last supply month.

For the generation charge component in power rates, in particular, that had been adjusted upwards by P0.2536 per kWh to P4.8707 per kWh vis-à-vis last month’s P4.6171 per kWh.

On the other tariff components, transmission charges for residential customers had been down by P0.1463 per kWh mainly due to substantial cost reduction in ancillary service charges of system operator National Grid Corporation of the Philippines (NGCP); while taxes and other charges posted an increase of P0.1280 per kWh.

According to Meralco, the charges at WESM “remained high at P8.7424 per kWh due to tight supply conditions in the Luzon grid,” and that was “aggravated by the ongoing Malampaya natural gas supply restriction.”

Meralco Vice President Lawrence S. Fernandez qualified in a briefing with reporters that “the charges in the spot market went up by more than P2.00 per kWh from the preceding supply month.”

The other factors that exerted pressure on the generation charge had been the 2.0-percent depreciation of the Philippine peso versus the US dollar; as well as the fuel shift of the gas plants because of the persisting restricted output of the Malampaya field.

To recall, the biggest power grid of Luzon was placed on ‘red alert’ on May 31 to June 2 – with the first two days resulting on rotational blackouts; while yellow alert condition, which still entails deficiency of power reserve, was raised on June 4 due to relentless unplanned outages of power plants and that shaved off more than 4,000 megawatts of capacity from the grid.

The utility firm similarly noted that as of May 28, Luzon grid registered peak demand of 11,640MW – which had been the highest so far this year.

“As a result of these, WESM prices were persistently high for extended periods – almost doubling the times when the secondary price cap was imposed during the June supply month,” the power firm stressed.

Overall though, the Meralco Vice President Joe Zaldarriaga asserted that their customers were still generally spared from what could have been bigger rate hikes that are parallel to the P1.00 to P3.00 per kWh increases suffered by customers of the electric cooperatives.

“We’ll try to achieve the balance necessary to shield consumers – that’s why even the time that we’ve had yellow and red alerts, we’ve not been hit hard like the other jurisdictions. Somehow, through our bilateral contracts, we’re able to shield the customers of Meralco from hefty price spikes,” he explained.

On supply procurement, the billings of the contracted independent power producers (IPPs) had been higher by P0.1929 per kWh; while the charges of its power supply agreements (PSAs) had been reduced by P0.0521 per kWh.

The bulk of the supply sourced by Meralco last month had been from its PSAs with 52.7-percent share; IPPs with 39.5-percent; then spot market procurement was at 7.8-percent.

Source: Manila Bulletin (