Power Bills to Increase in February as Weak Peso, LNG Costs Push Generation Charge Higher

Electricity rates are set to increase this February, with Manila Electric Company (Meralco) announcing an upward adjustment of P0.2834 per kilowatt-hour (kWh). This brings the total residential rate to P12.0262 per kWh, translating to an additional P57 charge for households consuming 200 kWh.

The primary driver of this rate hike is the increase in generation charges, with Independent Power Producer (IPP) rates rising by P0.8355 per kWh due to lower plant dispatch, peso depreciation, and higher liquefied natural gas (LNG) terminal fees from First Gas Sta. Rita and San Lorenzo power plants. Additionally, Power Supply Agreement (PSA) costs increased by P0.0837 per kWh, further contributing to the overall adjustment.

Meralco sources its electricity from three major channels: Wholesale Electricity Spot Market (WESM), Independent Power Producers (IPPs), and Power Supply Agreements (PSAs). Among these, IPPs account for 29% of the utility’s total energy supply, while PSAs contribute 43% and WESM makes up 28%.

This month, IPP charges increased significantly due to lower power plant output, the depreciation of the peso against the US dollar, and higher fuel costs. About 97% of IPP costs are dollar-denominated, making them vulnerable to forex fluctuations. The scheduled maintenance of Quezon Power in January, as part of the Department of Energy’s (DOE) Grid Operating and Maintenance Program, also contributed to the reduced dispatch and higher generation costs.

Meanwhile, PSA costs were also affected by the weaker peso, which impacted 61% of PSA-related expenses, leading to an additional P0.0837 per kWh increase.

Providing some relief, Wholesale Electricity Spot Market (WESM) charges decreased by P0.3005 per kWh, driven by lower demand in the Luzon grid. Both average and peak demand dropped by 585 MW and 803 MW, respectively, helping to balance the impact of higher generation costs from IPPs and PSAs.

While generation costs saw an increase, transmission charges for residential customers slightly decreased by P0.0013 per kWh, thanks to lower ancillary service charges. However, taxes and other pass-through charges registered a net increase of P0.1289 per kWh, including the higher Universal Charge-Missionary Electrification rate of P0.0171 per kWh, as approved by the Energy Regulatory Commission (ERC).

Additionally, this month’s rates reflect two downward adjustments related to regulatory reset fees, totaling P0.2287 per kWh, also mandated by the ERC.

Despite the overall increase, Meralco confirmed that its distribution charge remains unchanged. The last adjustment was a P0.0360 per kWh reduction in August 2022, and no further changes have been implemented since.

As the summer season approaches, when energy consumption typically surges, Meralco is urging customers to practice energy efficiency to help manage their electricity bills.

“We reiterate our call to all our customers to continue practicing energy efficiency as a way of life, especially with the upcoming summer months,” said Meralco Vice President and Head of Corporate Communications Joe R. Zaldarriaga.

Some power-saving tips suggested by Meralco include unplugging appliances when not in use, ironing large batches of clothes at once, avoiding overfilling refrigerators, regularly cleaning air conditioner filters, and switching to LED bulbs for lighting.

Meralco customers can also use the Meralco Appliance Calculator to estimate their household energy consumption and better manage their electricity bills.

With generation and transmission costs fluctuating due to forex movements, fuel prices, and seasonal demand shifts, consumers are encouraged to stay updated on future rate adjustments. Meralco customers can report concerns or seek assistance through the My Meralco app, the company’s official social media channels, or its customer service hotlines.

How will this electricity rate increase affect your household or business? Do you think energy efficiency measures can help offset the higher costs? Share your thoughts in the comments below, and follow Power Philippines for the latest energy price updates and industry developments!