MAINTENANCE SHUTDOWN OF MALAMPAYA NATURAL GAS FACILITY DRIVES NOVEMBER POWER RATES UPWARD
MANILA, PHILIPPINES, 12th November 2021 – The Manila Electric Company (Meralco) announced today that overall rate for a typical household went up by P0.3256 per kWh to P9.4630 per kWh, from last month’s P9.1374, due to higher generation charge. This is equivalent to an increase of around P65 in the total bill of a residential customer consuming 200 kWh.
Higher Costs due to Malampaya Shutdown triggered Generation Charge Increase
The November generation charge went up by P0.2911 per kWh to P5.3346 per kWh from P5.0435 per kWh the previous month as a result of the Malampaya natural gas facility shutdown. The shutdown resulted in higher costs of power from the Wholesale Electricity Spot Market (WESM) and Independent Power Producers (IPPs).
The Malampaya facility maintenance shutdown from October 2 to 25 resulted to lesser available supply in the WESM. The tight supply condition in the Luzon Grid led to sustained high prices in the WESM and triggered the secondary price cap on September 30, October 1, October 21 and 22, or 8.39 percent of the October supply month. The Luzon grid was also put on Yellow Alert on October 20 due to forced outages of several power plants. As a result, WESM charges went up by P1.7073 per kWh.
Charges from IPPs also increased by P0.8186 per kWh. To ensure continuous power supply and to avoid rotating power interruptions, First Gas-Sta. Rita and San Lorenzo plants shifted to more expensive alternative fuel during the 24-day Malampaya shutdown.
Charges from Power Supply Agreements (PSAs), on the other hand, went down by P0.2841 per kWh mainly due to higher excess energy deliveries, which are priced at a discount, from AC Energy, First Gen Hydro Power, San Miguel Energy and South Premiere Power. The new PSA of Meralco with the Power Sector Assets and Liabilities Management Corporation (PSALM) also contributed to the decrease in the PSA rate.
For October supply, WESM, IPPs and PSAs accounted for 13.9, 37.4, and 48.7 percent, respectively, of Meralco’s energy requirement.
This month’s generation charge increase would have been significantly higher, but Meralco took the initiative to cushion the impact in the bills of its customers.
The distribution utility coordinated with some of its suppliers to defer collection of portions of their generation costs. These deferred charges will subsequently be billed on a staggered basis over the next four months as directed by the Energy Regulatory Commission (ERC).
Distribution True-Up Continues to Mitigate Increase
Meralco’s continued implementation of the Distribution Rate True-Up refund which began in March 2021 also helped temper the overall increase. The refund rate for residential customers is at P0.2761 per kWh and appears in customer bills as a line item called “Dist True-Up.
It can be recalled that the ERC provisionally approved Meralco’s proposal to refund around P13.9 billion over a period of 24 months or until the amount is fully refunded. This amount represented the difference between the Actual Weighted Average Tariff and the ERC-approved Interim Average Rate for distribution-related charges for the period July 2015 to November 2020.
Transmission and Other Charges
Transmission charge for residential customers decreased by P0.0403 per kWh due to lower Ancillary Service and Power Delivery Service charges.
Taxes, system loss and other charges, registered an increase of P0.0748 per kWh. The collection of the Universal Charge-Environmental Charge amounting to P0.0025 per kWh remains suspended, as directed by the ERC.
Meralco reiterated that it does not earn from the pass-through charges from generation and transmission, as payments go to the power suppliers and the system operator, respectively, while taxes, universal charges, and Feed-in Tariff Allowance (FIT-All) are remitted to the government.
Distribution, supply, and metering charges which are the only costs that go to Meralco have remained unchanged for 76 months, after registering a reduction back in July 2015