Increase in WESM charges lead to higher generation cost

8 April 2021

Manila, Philippines, 8th April 2021 – One month after reaching the lowest power rate level since August 2017, the Manila Electric Company (MERALCO) announced today a slight upward adjustment this April, as the overall rate for a typical household increased by P0.0872 per kWh, from last month’s P8.3195 to P8.4067 per kWh. This is equivalent to an increase of around P17 in the total bill of residential customers consuming 200 kWh.

This month’s overall rate is still P0.5884 per kWh lower than last year’s rate of P8.9951 per kWh.

This month’s rate also still includes the ERC-approved adjustments for pass-through over/under-recoveries for the period January 2017 to December 2019. In an Order released 29 December 2020, ERC directed MERALCO to refund over-recoveries in transmission and other charges over a period of approximately three months and to collect an under-recovery in the generation rate for approximately 24 months. MERALCO implemented the ERC-approved adjustments starting January 2021. The impact to residential customers, from the months of January to April 2021, is a net refund of around P0.1150 per kWh.

MERALCO is also continuing its implementation of the Distribution Rate True-Up refund, which began in March 2021.  The Energy Regulatory Commission (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 represents 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.  For residential customers, the refund rate is P0.2761 per kWh and will appear in customer bills as a line item called “Dist True-Up”.

Higher WESM prices lead to generation charge increase

Generation charge for April is P4.5370 per kWh, P0.1621 higher than last month’s P4.3749 per kWh.

WESM charges increased by P2.5991 per kWh due to tighter supply conditions in the Luzon grid. Peak demand in Luzon increased by almost 1,000 MW in March as a result of warmer temperature, while unavailable capacity from plant outages remained above 3,400 MW. WESM share is slightly down to 11% this month.

Mitigating the increase in WESM charges are the lower costs from Independent Power Producers (IPPs) and Power Supply Agreements (PSAs). Charges of IPPs and PSAs decreased by P0.2090 and P0.1371 per kWh, respectively, due to improved average plant dispatch and Peso appreciation.  The shares of IPPs and PSAs this month were 39% and 50%, respectively.

Movements in Other Charges

Transmission charge for residential customers decreased by P0.0856 per kWh mainly due to lower ancillary service charges, while taxes and other charges registered a net increase of P0.0107 per kWh.

Meanwhile, collection of the Universal Charge-Environmental Charge amounting to P0.0025 per kWh remains suspended, as directed by the ERC.

MERALCO’s distribution, supply, and metering charges, meanwhile, have remained unchanged for 69 months, after these registered reductions in July 2015. MERALCO reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the NGCP. Taxes and other public policy charges like the Universal Charges and the FIT-All are remitted to the government.

Meralco continues to promote energy efficiency to customers 

Meralco reiterated its call for energy efficiency, as historically, the summer season may bring an increase in residential electricity consumption by 10% to 40% versus average consumption during the cool months of January and February. As temperature increases, appliances that have compressors, like air conditioners or refrigerators, will have to work harder. Electric fans are also used longer than usual, and often at “high” setting to beat the summer heat.

According to Meralco FVP and Chief Commercial Officer Ferdinand O. Geluz, “this summer, you have the power, as Meralco encourages its customers to continue practicing energy efficiency initiatives at home to be ready in managing their consumption.”

Geluz added “these simple everyday activities include cleaning your air con filters every 2 weeks to ensure optimal performance, setting your aircon’s thermostat to 25oC to maximize efficiency, making sure you use the right aircon size for your room,  making sure your refrigerator’s air vents are not blocked to keep its compressor from working harder, unplugging appliances when not in use to avoid phantom load, using a power strip to make it easier and more convenient to turn appliances off simultaneously with just one switch, and maximizing natural light during daytime.”

For more bright ideas and energy efficiency tips, customers may also visit or follow Meralco on Facebook and Instagram: meralcoph.