WESM CHARGES PUSH JULY RATES UPWARDS
MANILA, PHILIPPINES, 9th July 2021 – Four months after reaching the lowest power rate level since August 2017, the Manila Electric Company (MERALCO) announced today a slight upward adjustment this July, as the overall rate for a typical household increased by P0.2353 per kWh, from last month’s P8.6718 to P8.9071 per kWh this month, mainly as a result of persistently high charges in the Wholesale Electricity Spot Market (WESM). This is equivalent to an increase of around P47 in the total bill of a residential customer consuming 200 kWh.
Increase Tempered by Refund in Meralco’s Distribution Charges
The increase this month was tempered by MERALCO’s continued implementation of the Distribution Rate True-Up refund, which began March 2021. 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 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 appears in customer bills as a line item called “Dist True-Up”.
Generation Charge Increase due to High WESM Charges
Generation charge for July is at P4.8707 per kWh, a P0.2536 increase from last month’s P4.6171 per kWh.
WESM charges remained high at P8.7424 per kWh due to tight supply conditions in the Luzon grid, aggravated by the ongoing Malampaya natural gas supply restriction. The Luzon grid was placed on Red Alert from May 31 to June 2 and on Yellow Alert on June 4 amid the unplanned shutdown of power plants, which shaved off as much as 4,000 MW of power from the grid. In addition, Luzon demand reached 11,640 MW on May 28, the highest so far on record. 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.
Charges from IPPs also increased by P0.1929 per kWh. With reduced gas supply from Malampaya, affected plants resorted to the use of more expensive liquid fuel to continue operating and avoid more or longer brown outs. IPP charges were also pushed up by the Peso’s depreciation, as dollar-denominated charges account for 97% of IPP costs. Meanwhile, cost of power from PSAs decreased by P0.0521 per kWh.
WESM, IPPs, and PSAs provided 7.8%, 39.5%, and 52.7% of MERALCO’s energy requirement this month, respectively.
Movements in Other Charges
Transmission charge for residential customers registered a reduction of P0.1463 per kWh due to a significant decrease in Ancillary Service charges. Taxes and other charges registered an increase of P0.1280 per kWh.
Meanwhile, collection of the Universal Charge-Environmental Charge remains suspended, as directed by the ERC.
MERALCO’s distribution, supply, and metering charges, have remained unchanged for 72 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 still continues to encourage energy efficiency and provide customers with tips for the household in order to better manage electricity consumption.
These simple everyday activities include cleaning your aircon 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.