Meralco raises April rates on higher generation costs

By Sheldeen Joy Talavera, Reporter

Residential customers of Manila Electric Co. (Meralco) will face higher electricity bills this month after the distribution utility raised charges, driven mainly by higher generation costs linked to the peso’s depreciation.

Meralco announced on Friday an increase of P0.5335 per kilowatt-hour (kWh), bringing the overall rate to P14.3496 per kWh in April, up from P13.8161 per kWh in March.

The upward adjustment translates to an increase of P107 in the monthly electricity bill of households consuming 200 kWh, the company said in a statement.

Households consuming 300 kWh, 400 kWh, and 500 kWh will pay an additional P160, P213, and P267, respectively.

Meralco Spokesperson Joe R. Zaldarriaga said the rate hike was driven by higher generation charges, which rose by P0.5257 per kWh to P8.3864 per kWh, largely due to the weakening of the peso against the US dollar.

The Philippine peso closed at a record low of P60.748 per US dollar on March 31, weakening by P3.083 from its Feb. 27 finish of P57.665.

The peso’s depreciation affected almost all of Meralco’s supply costs from gas-fired plants, as well as 44% of its power supply agreements, which are denominated in US dollars.

Charges from the Wholesale Electricity Spot Market (WESM) — the venue for trading electricity — also increased by P2.3955 per kWh due to tight supply conditions in the Luzon grid.

Global markets, particularly those reliant on imported oil, continue to face volatility in supply and prices amid disruptions in the Middle East.

While oil-based power generation accounts for only a small share of the Philippines’ electricity mix, rising oil prices also exert upward pressure on the cost of gas and coal, which the country largely imports.

However, Meralco officials noted that the increase in generation charges has yet to reflect expected fuel price increases resulting from the Middle East war.

Lawrence S. Fernandez, Meralco vice-president and head of utility economics, said this month’s electricity rates have not yet been affected by the conflict, as the fuel supply used in March had been procured before the outbreak.

“We expect the impact on fuel costs to be reflected in the May generation charge,” he said.

He added that recent government measures, such as the suspension of spot market trading and the introduction of a new pricing mechanism, are intended to mitigate any sharp increase in generation costs.

Tempering this month’s rate hike was a decline in transmission charges, which fell by P0.0656 per kWh due to lower ancillary service charges incurred by the grid operator from the reserve market.

Other charges, including taxes, registered a net increase of P0.0734 per kWh.

Mr. Fernandez said it is difficult to project next month’s electricity rates due to multiple factors, particularly foreign exchange movements.

“That could contribute to downward pressure on generation costs. However, fuel costs are exerting upward pressure. So we’ll have to wait until the end of the month, once we receive the bills from our suppliers, to determine what the net impact will be,” he said.

Amid the dry season and continued volatility in global markets due to the Middle East conflict, Meralco urged customers to practice energy efficiency to better manage electricity consumption.

“We urge our customers to continue practicing energy efficiency and conservation. Beyond helping manage consumption and electricity bills, these practices can contribute to mitigating the impact of external factors on electricity costs,” Mr. Zaldarriaga said.

On the supply side, the company said there will be no rotational brownouts despite the country being under a state of national energy emergency.

“The Department of Energy’s latest simulations showed that there is no expected supply deficiency in the Luzon grid, even during the summer period,” Mr. Fernandez said.

Meralco is the country’s largest private electric distribution utility, serving more than 8.2 million customers in Metro Manila and nearby provinces, including Bulacan, Cavite, Rizal, and parts of Laguna, Batangas, Pampanga, and Quezon.

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.