The Manila Electric Company (MERALCO) announced a significant upward adjustment of P2.1496 per kilowatt-hour (kWh) in the electricity rate for July.
For residential customers consuming 200 kWh, this adjustment translates to an increase of approximately P430 in their total electricity bill.
This increase is primarily due to higher generation charges as power costs normalized following the artificially low rates of the previous month. The overall rate for a typical household is P11.6012 per kWh, up from P9.4516 per kWh in June.
Generation charges rose by P2.0021 per kWh this July. This increase follows the Energy Regulatory Commission’s (ERC) directive to stagger the collection of charges for the May supply month in four equal monthly installments until September 2024.
This directive also allowed the deferment of around P500 million in May generation costs until September 2024, as requested by MERALCO, along with Quezon Power (Philippines) Ltd. (QPPL), San Buenaventura Power Ltd. Co. (SBPL), and South Premiere Power Corporation (SPPC) under its 2024 Emergency Power Supply Agreement (EPSA).
For the July billing, WESM charges are also higher by P6.6370 per kWh, reflecting the normalization and partial recovery of deferred WESM costs from May. This increase was mitigated by a reduction in spot market prices as average demand in the Luzon grid decreased by about 900 MW. The secondary price cap was triggered only 6.6% of the time for this supply month, compared to 19.3% in the previous month.
Charges from Independent Power Producers (IPPs) also increased by P0.4392 per kWh due to higher fuel costs and lower average plant dispatch, with San Lorenzo Module 50 experiencing a forced outage for 13 days in June. The IPP rate also included the first collection of May 2024 deferred costs for QPPL.
Similarly, charges from Power Supply Agreements (PSAs) rose by P0.3530 per kWh as they normalized and included the recovery of deferred costs for SBPL and SPPC’s 2024 EPSA. For this period, WESM, IPPs, and PSAs accounted for 34%, 28%, and 38% of MERALCO’s total energy requirement, respectively.
The transmission charge decreased by P0.1550 per kWh due to the absence of reserve market settlement charges that had affected the previous month’s ancillary service charges. However, taxes and other charges registered a net increase of P0.3025 per kWh. This month’s rates included adjustments in generation, transmission, system loss, and lifeline subsidy charges, as per the ERC rules governing automatic cost adjustments and the true-up mechanism for pass-through charges.
“We again appeal for the understanding of our customers over the delayed bills as we sought guidance from the ERC on the implementation of this month’s rate adjustment. Rest assured that MERALCO will adjust the due dates to give our customers enough time to settle their bills,” said MERALCO Vice President and Head of Corporate Communications Joe R. Zaldarriaga.
Pass-through charges for generation and transmission are paid to the power suppliers and the grid operator, respectively, while taxes, universal charges, and feed-in tariff allowance are remitted to the government.
