Meralco rates are flat while fuel prices and political sensationalism are high

Many groups and individuals keep attacking Meralco and other private distribution utilities (DUs) for the increase in electricity prices even if they know that the Middle East war has caused fuel prices to rise. Their attacks are based on emotion and political sensationalism and not reason, not on data, so I will show some numbers here that are publicly available online.

The rise in overall electricity prices in the latest billing period came from the generation charge, which increased from P7.67 per kilowatt-hour (kWh) in May 2023 to P8.79/kWh in May 2026. The transmission charge also increased, from P0.79/kWh in May 2025 to P1.41/kWh in May 2026. This is because the National Grid Corp. of the Philippines (NGCP) is forced to contract more ancillary services (AS), and the AS charge is now at a similar level as the transmission wheeling charge at around P0.70/kWh each.

There was a slight increase in the system loss charge, the universal charge for missionary electrification (UCME), and Feed-in Tariff Allowance (FIT-All) in the May 2026 billing.

But there was no increase in the distribution charge, and the supply and metering charge that went directly to Meralco and other DUs. There was also a refund for some customers, the Actual Weighted Average Tariff (AWAT) in 2025-2026, previously called “true up” in 2022-2023 (see Table 1).

Let us now check the prices of electricity from major power plants and generation companies (gencos) that supply Meralco. The largest increase in prices from May 2025 to May 2026 are from the gas plants using indigenous Malampaya gas — First Gas (FGCP) and FGP Corp. — about a P2/kWh increase. Gas plants that use imported LNG — SPPC and EERI — come next.

People think that indigenous gas should remain cheap. No, that is not the case. Malampaya gas prices are pegged on Dubai crude oil prices, and are priced in US$ not Pesos. So, a rise in Dubai oil prices and the depreciation of the Peso mean windfall profit for FGCP and FGP Corp., owned by FirstGen (Lopez) and Prime CoreGen (Razon).

Coal plants like AboitizPower’s GNPower Dinginin, Masinloc Power Partners Co. Ltd.’s (MPCL) Masinloc Power Plant, and that of the Mariveles Power Generation Corp. still offer low prices, about half the cost of gas plants. The prices of the Wholesale Electricity Spot Market (WESM) are more than double this year compared with last year’s (see Table 2).

So it is clear. Meralco and the DUs are not to blame for the higher electricity prices, their distribution charges are flat. Also, the cost of fuel is high for power plants and gencos that use imported fuel like coal and LNG.

If people are looking for someone to blame for rising electricity prices, then blame the US and Israel for starting the Middle East war last February and blame Iran for choking the Strait of Hormuz. Blame also the gas companies that use domestic Malampaya gas. And blame intermittent solar-wind companies with no battery storage that force the NGCP to get more AS.

Political NGOs and other parties (like SELDA, SENTRO, Akbayan and others) that keep blaming Meralco and other DUs for the increase in the price of electricity are guilty of disinformation based on emotionalism and are lazy when it comes to doing some real research.

Meanwhile, as more intermittent and variable renewable energy (VRE) sources like solar-wind with no battery storage are added to the grid, coal and gas plants experience more frequent stops and starts because VRE are the priority and mandatory dispatch to the grid.

I asked Yari A. Miralao, the President and CEO of LNGPH (that owns the 1,200 MW SPPC and 1,275 MW EERI gas plants in Batangas) how the rising cases of start-stop affect their operation and pricing. He pointed out that both plants are designed for baseload and continuing operations so they can “provide the most efficient and reliable power for the grid. Two-shifting or cycling these power plants from minimum stable load to maximum output induces additional thermal and mechanical stress to the equipment resulting in (a.) more frequent maintenance and (b.) higher fuel and operating costs. LNGPH, nonetheless, does what it has to do to make sure it meets the system’s requirements in the most reliable and efficient way possible.”

I also chanced upon Manny V. Rubio, the President and CEO of Meralco Power Gen Corp. (MGEN), and I asked him how they balance their portfolio between stable and unstable energy to ensure overall power stability at competitive prices. The practical engineer-manager emphasized having a balanced business. “We believe in a diversified portfolio that delivers reliability, affordability, and sustainability. A successful energy transition requires balance — renewables must be complemented by dependable baseload generation and emerging storage technologies that ensure grid stability.

“As we continue to build and expand our portfolio of thermal, gas, and renewable energy assets, we are also investing in battery energy storage systems such as the one we recently energized in Toledo, Cebu and the one we are building in MTerra Solar to support the integration of intermittent renewable generation, avoid transmission constraints, and ensuring that electricity remains available.”

Good points made by the gentlemen.

I am no fan of having more VRE but there is a coercive law (RA 9513, RE law of 2008) in place that arm-twists companies and consumers to comply, so the compromise is to make sure that VRE is balanced with grid reliability. We should have no blackouts, even for a minute, even if the sun is not shining, even if the wind is not blowing.

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.

minimalgovernment@gmail.com