Meralco Power Rates Expected to Rise in February Due to Currency Impact and Transmission Costs

Filipino consumers may see higher electricity rates in February as Manila Electric Co. (Meralco) warns of a possible increase in generation charges, largely influenced by the peso depreciation. The company also cited an expected rise in transmission charges following the Energy Regulatory Commission’s (ERC) directive to collect the remaining reserve market settlement fees incurred in March last year.

Meralco spokesperson Joe Zaldarriaga confirmed that while the company is still waiting for final billings from its suppliers, preliminary data indicates upward pressure on power rates. Meralco will release the final power rate adjustment on Tuesday, which will determine the actual impact on household electricity bills.

Meralco sources its power from three main channels: the Wholesale Electricity Spot Market (WESM), independent power producers (IPPs), and power supply agreements (PSAs). Many of these contracts are dollar-denominated, meaning their costs increase when the peso weakens against the US dollar. With the recent depreciation of the peso, suppliers are charging higher generation costs, which is expected to be reflected in February’s billing cycle.

Zaldarriaga also pointed out that another contributing factor to the potential rate hike is the increase in transmission charges. The ERC had earlier ordered the collection of reserve market settlement fees, with 30% already recovered in previous months. The remaining 70% of the fees are now due for collection, adding to the overall rate increase for Meralco customers.

“To recall, the ERC directed the recovery of these fees over a period of three months beginning the February billing. We hope these upward pressures will be somehow tempered by the one-time refund of regulatory reset costs of distribution utilities similarly ordered by the ERC effective this month,” Zaldarriaga explained.

In an effort to ease the impact on consumers, the ERC has also mandated a one-time refund of regulatory reset costs to be applied to February bills. For Meralco customers, this refund will offset approximately P0.23 per kilowatt-hour (kWh). While this may partially counteract the increase, it remains uncertain whether the refund will be enough to fully neutralize the expected rate hike.

In January, Meralco implemented a P0.2189 per kWh reduction in electricity rates, bringing the overall cost for a typical household to P11.7428 per kWh, down from P11.9617 per kWh in December. However, with the current forex volatility and the additional transmission charges, consumers may see higher bills again this month.

Energy analysts note that fluctuations in power rates are expected, especially as external factors like global fuel prices, currency exchange rates, and regulatory adjustments continue to impact generation and transmission costs.

Meralco is set to release the final power rate adjustments on Tuesday, February 11, providing clarity on the actual increase consumers will face. Households and businesses are advised to monitor their electricity consumption, especially as generation costs remain volatile due to currency fluctuations and regulatory settlements.

How do you feel about the expected power rate adjustment? Do you think the regulatory refund will be enough to offset the higher generation and transmission charges? Share your thoughts in the comments below, and follow Power Philippines for the latest updates on energy prices and regulatory developments!