Meralco Power Electricity Rate Increase

Consumers of Manila Electric Co., the country’s biggest power distributor will have to brace for higher generation charges of almost P1 per kilowatthour (kWh) this month.

Meralco attributed the higher generation charges due to the higher power rates from the wholesale electricity spot market (WESM) and the National Power Corp.

Meralco customers with a monthly average consumption of 200 will see their charges go up by P196 this month.

Meralco said in a statement that after two months of successive declines in the generation charge totaling P1.78 per kwh, the generation charge for November went up to P5.2940 per kWh from P4.3140 per kWh in October.

Meralco said the high WESM prices accounted for P0.55 of the P0.98 per kWh increase in the generation charge.

WESM serves as the trading floor of electricity where buyers and sellers can trade electricity.

“The effective WESM price billed to Meralco in October which is the basis of the November generation charge was at P11.34 per kWh, higher by over P4 than the P7.15 per kWh rate for September,” the country’s biggest power distributor said.

Cost of WESM purchases last October approximates the level in March (P11.36 per kWh) and is slightly lower than the peak P12.16 per kWh logged in February this year.

Meralco purchased 10 percent of its requirements from the WESM last month.

A Meralco official said prices at the WESM went up last month due to a number of factors, including the non-availability of the cheaper plants.

The company said the increase in Napocor’s rate to P4.85 per kWh contributed P0.41 to the P0.98 increase in the generation charge.

“This was expected since the Napocor rate last month was abnormally low at P3.68 per kWh as it reflected a one-time adjustment that effectively lowered the generation charge by P0.34 per kWh,” Meralco said.

Meralco bought 42 percent of its requirements from Napocor, including the 14 percent allotted for special programs as the ecozone rate.

Its cheapest source of power are its independent power producers (IPPs), namely First Gas Power Corp and Quezon Power Philippines Ltd.

It said the average cost of the IPPs remained stable at P4.23 per kWh, a slight P0.036 increase from a low of P4.19 per kWh registered in September.

The average IPP dispatch stood at 86.8 percent, lower than the peak dispatch registered in September of 93.9 percent.

Meralco said one of the natural gas plants, San Lorenzo underwent a major maintenance outage starting October 16 and is expected to be back on line on November 12.

Meralco said the generation charge does not go to the distribution company. It is paid to power generators such as Napocor, generators selling through the WESM and the IPPs with whom it has contracts.

“Despite the adjustment, the November generation charge is lower than levels reflected in the bills of Meralco customers from March to September of this year,” Meralco said.

Meralco said the generation charge is the biggest component of the electricity bill, comprising on the average about 60 percent of what consumers pay for.

The company reiterated its plan of putting up generation plants within the next two to five years to help bring down the cost of generation in the medium and long term.

“This is aligned with its mission of providing its customers the best value in energy, products and services.

Meralco’s entry in generation will help address the expected tightness in power supply, improve reliability and should result towards lowering the over-all cost of power to consumers,” it said.

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