Meralco cuts power rates slightly after 3-mo. hikes

Residential customers of Manila Electric Co. (Meralco) will see a slight reduction in their electricity bills this month after three consecutive monthly increases, as regulatory interventions softened what could have been a bigger jump in power rates amid higher fuel prices linked to the Iran war.

At a briefing on Wednesday, Meralco said the overall electricity rate for May fell by PHP 0.0151 per kilowatt-hour (kWh) to PHP 14.3345 per kWh from PHP 14.3496 per kWh in April.

For households consuming 200 kWh, the adjustment translates to a decrease of about PHP 3 in monthly electricity bills.

Joe R. Zaldarriaga, Meralco vice-president and head of corporate communications, said the slight reduction was mainly due to mitigating measures approved by the Energy Regulatory Commission (ERC) to ease the impact of elevated global energy prices on consumers.

“We expect this to somehow help consumers, even if only slightly, because instead of a bigger increase, rates declined by around 1.5 centavos per kilowatt-hour,” he told the briefing in Filipino.

The overall decline came despite a sharp increase in generation charges, which rose to PHP 8.7942 per kWh from PHP 8.3864 per kWh in April.

Meralco said the higher generation charge was largely driven by increased costs from the Wholesale Electricity Spot Market (WESM), where electricity prices climbed amid stronger demand and higher fuel costs.

The average WESM prices increased to PHP 5.63 per kWh during the April supply period from PHP 4.31 per kWh, according to the Independent Electricity Market Operator of the Philippines (IEMOP).

Average electricity demand also rose by 7.6% month on month to 14,404 megawatts, tightening supply margins in the grid during the peak summer season.

“The increase is expected every summer,” IEMOP Vice-President for Trading Operations Isidro E. Cacho, Jr. told a separate briefing. “April to May is our peak period in the grid… because the weather in the Philippines is hot.”

Mr. Cacho also pointed to higher fuel prices caused by the Iran war as another factor behind the rise in electricity costs.

WESM lets distribution utilities and suppliers buy electricity when their contracted power supply is insufficient to meet customer demand.

Meralco said charges from WESM increased to PHP 7.7239 per kWh during the period.

Meanwhile, costs from independent power producers (IPP) also rose by PHP 0.1786 per kWh due to higher fuel prices and the peso’s depreciation, which affected dollar-denominated expenses.

For the billing period, power supply agreements (PSA), IPPs and WESM accounted for 73%, 20% and 7%, respectively, of Meralco’s energy requirements.

Despite the higher generation costs, several regulatory measures helped offset the increase.

One of the biggest contributors to the lower overall rate was the accelerated implementation of Meralco’s refund program.

The refund rate increased by PHP 0.2254 per kWh to PHP 0.4278 per kWh after the ERC ordered the utility to complete the refund of the remaining PHP 14.2 billion within one year instead of the original two-year schedule.

Taxes and other charges also declined by PHP 0.1482 per kWh after the ERC suspended the collection of the green energy auction allowance (GEA-All) worth PHP 0.0371 per kWh until June.

The GEA-All is imposed on on-grid consumers to fund incentives for renewable energy projects awarded under the government’s green energy auction program.

Consumers also partially benefited from the implementation of the value-added tax exemption on electricity generated from indigenous natural gas under the Philippine Natural Gas Industry Development Act.

Transmission charges likewise fell by PHP 0.0493 per kWh following lower transmission wheeling rates and ancillary service costs.

IEMOP data showed average transmission rates declined by 8.8% to PHP 1.5983 per kWh from PHP 1.7526 per kWh in March, partly due to higher energy consumption spreading transmission costs across a larger volume.

As another mitigating measure, the ERC allowed Meralco to immediately reflect line rental caps under its PSAs in this month’s billing, reducing PSA charges by PHP 0.1793 per kWh.

Meralco reminded customers that despite the lower rates, actual electricity bills might still increase if household consumption rises during the dry season.

“While overall electricity rates have gone down, the dry season is typically marked by higher consumption, especially from cooling appliances, which can still drive bills upward,” Mr. Zaldarriaga said.

“By being more mindful of their power consumption and observing energy efficiency, customers can take better control of their electricity bills,” he added.

Meralco’s controlling shareholder, 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. — Sheldeen Joy Talavera, Reporter