Meralco rates may go up this month

MANILA, Philippines — Upward pressure on generation and transmission charges could push rates of Manila Electric Co. (Meralco) higher for a second straight month this October.

Meralco vice president and head of utility economics department Lawrence Fernandez said that while the power distributor has yet to receive billings from its suppliers, initial indications show an upward pressure on the generation charge this month.

He said this is primarily because of the impact of supply restrictions on power plants that use natural gas.

“Some plants had to resort to the use of more expensive alternative fuel, while First Natgas-San Gabriel was forced to shut down,” Fernandez said.

The generation charge, a pass-through charge paid to power suppliers, accounts for more than half of the electric rate.

Meralco’s generation costs are usually influenced by the exchange rate, the supply-demand situation and its effect on wholesale electricity spot market prices and international fuel prices.

“For the transmission charge, there may also be upward pressure on the ancillary service charge component, as the Energy Regulatory Commission approved more ancillary service procurement agreements that were obtained by the National Grid Corp. of the Philippines after the conduct of a competitive selection process,” Fernandez said.

The transmission charge is also a pass-through charge paid by the company to the grid operator.

Meralco only earns from distribution, supply and metering charges.

Last month, rates of Meralco went up due to higher generation charge, ending two straight months of rate reductions.

Overall rate for a typical household in September rose by P0.5006 per kilowatt-hour to P11.3997 per kWh from P10.8991 per kWh the previous month.

Meralco earlier said that the “ber” months are normally low consumption months compared to summer months, which is why overall rates would not be as high as that in the summer months.

The largest electric power distribution company and biggest private sector utility in the country, Meralco provides electric service within its franchise coverage and has a consolidated customer count of 7.716 million as of end June.