Expect higher electricity rates this summer – Meralco

Expect higher electricity rates this summer – Meralco
Meralco's rate hike this month is mainly due to higher generation charge – the largest component of an electricity bill

MANILA, Philippines — The Manila Electric Company (Meralco) warned consumers of higher electricty rates in the coming months after it announced a P0.42 per kilowatt hour (kWh) increase this February.

Meralco announced on Friday, February 5, that electricity bills for this month will go up by P0.42 per kWh to P8.82 per kWh compared to last month’s overall rates.

“Customers can expect even higher rates in coming months,” said Meralco in a statement. 

It said that based on historical data, consumption (and consequently overall demand for power) spikes as temperature rises. (READ: What Meralco’s rate hike tells us about the power sector)

This could be more evident, especially since the Philippines is experiencing El Niño, Meralco said.

For a typical household consuming 200 kWh, the P0.42 per kWh rate hike translates to an additional amount of around P85 to the overall electricity bill.

Higher generation charge

The increase in the overall rates was primarily due to a higher generation charge, which increased by P0.25 per kWh to P4.17 per kWh from last month’s rate.

Generation charge is the largest component of an electric bill, and is a pass-through charge similar to transmission charge. 

Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the National Grid Corporation of the Philippines (NGCP).

Meralco explained that plants under the Power Supply Agreements (PSAs) registered an increase of P0.76 per kWh. 

Cost of purchases from PSAs – which were low in January due to adjustments from an annual reconciliation of outage allowances – normalized this month. 

Increase in PSA fees

Also contributing to the increase in PSA charges are their lower plant capacity factors.

These are partly due to the scheduled maintenance shutdown of one unit each of the Calaca and Masinloc Power plants.

Because of lower system demand, charges from the Wholesale Electricity Spot Market (WESM) registered a reduction of P2.21 per kWh.

The average rate of the Independent Power Producers (IPPs) also slightly went down by P0.01 per kWh. 

The average price of natural gas for the First Gas plants went down, following the quarterly repricing of Malampaya natural gas. 

However, the lower fuel costs were offset by reduced dispatch levels of the IPPs.

The share of IPPs, PSAs, and WESM to Meralco’s total power requirements stood at 47.2%, 46.7%, and 6.1%, respectively. 

Transmission charge went up by P0.08 per kWh due to higher ancillary charges. 

Following the increase in generation and transmission charges, taxes also increased by P0.05 per kWh. 

Other charges likewise increased by P0.04 per kWh.

Meanwhile, Meralco’s distribution, supply, and metering charges remain unchanged after it registered a reduction last July.

Energy-efficiency tips

As summer approaches, Meralco reminded consumers to observe energy-efficiency tips. 

This includes setting the air conditioner’s thermostat from high cool (18°C) to mid cool (25°C). By doing so, customers may save up to P354 per month. 

Electric fans should also be regularly cleaned from dust accumulation on the fan blades and motor housing. This saves around 5% percent in electricity costs.  

Likewise, adjusting fan settings to low speed can also cut your electricity bills by 17%. — Rappler.com

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