Electricity prices rose in June as tighter regional supply conditions pushed up wholesale market prices, while Manila Electric Company (Meralco) separately announced higher July rates for customers in its franchise area due mainly to higher generation charges.

The Independent Electricity Market Operator of the Philippines’ (IEMOP) report covers the broader Wholesale Electricity Spot Market (WESM), while Meralco’s announcement applies specifically to customers within its service area.

For the broader market, IEMOP said the system-wide average market price rose by 22.7% to PHP 9.56 per kilowatt-hour in June from PHP 7.79 per kWh in May.

This came even as system-wide average supply and demand both declined, as localized supply tightness, reserve deficiencies, outages, and transmission constraints affected real-time market prices.

By region, Luzon’s average price increased by 13.3% to PHP 7.95 per kWh, while Visayas prices jumped by 41.7% to PHP 14.46 per kWh. Mindanao prices likewise rose by 37.5% to PHP 12.75 per kWh.

IEMOP said Visayas and Mindanao saw sharper increases as supply declined more sharply relative to demand, while both grids experienced generation deficiencies, reserve shortages, grid alerts, and outages of large generating units.

In the Visayas region, the Leyte-Luzon high-voltage direct current interconnection operated at its maximum Luzon-to-Visayas transfer limit or at a security-limited transfer level for 67.46% of the billing period.

The interconnection helps move power between grids, and IEMOP said the limitations restricted the flow of lower-cost Luzon generation into the Visayas, contributing to price separation between Luzon and the Visayas-Mindanao grids.

“Grid alerts are more commonly associated with the summer months, when electricity demand is typically higher. This year, however, continued generating-unit outages and tighter regional supply conditions extended beyond the summer period, particularly in the Visayas and Mindanao,” IEMOP Vice President for Trading Operations Engr. Isidro E. Cacho Jr. said.

For Meralco customers, the distribution utility said its July electricity rate increased by PHP 0.3428 per kWh, bringing the overall rate for a typical household to PHP 14.8261 per kWh from PHP 14.4833 per kWh in June.

For residential customers consuming 200 kWh, the adjustment translates to an increase of around PHP 69 in the total electricity bill.

Meralco said the biggest driver of the increase was the generation charge, which rose by PHP 0.1800 per kWh to PHP 9.2504 per kWh, largely due to higher fuel prices.

Charges from First Gas and Prime CoreGen rose after the scheduled one-month maintenance shutdown of the Malampaya natural gas facility starting June 15, which prompted the Sta. Rita and San Lorenzo plants to use more expensive liquefied natural gas.

Meralco said charges from post-EPIRA power supply agreements also increased due to the impact of the continuing Middle East conflict on the global energy market.

WESM prices also rose for Meralco after demand in Luzon reached a record high of 14,534 MW on May 28, with tighter supply conditions leading to more frequent imposition of the secondary price cap.

For the billing period, Meralco said power supply agreements accounted for 72% of its total energy requirement, while First Gas and Prime CoreGen accounted for 22%. WESM accounted for the remaining 6%.

Taxes also increased by PHP 0.0960 per kWh, mainly because liquefied natural gas is subject to 12% value-added tax, while Malampaya gas is VAT-exempt.

Transmission and other charges similarly rose by PHP 0.0668 per kWh.

Meralco noted that the Energy Regulatory Commission extended the collection suspension of the PHP 0.0371 per kWh Green Energy Auction Allowance until August 2026.

The company also said its distribution charge has not moved since the PHP 0.0360 per kWh reduction for a typical residential customer beginning August 2022.

IEMOP said June was a volatile month for the WESM. While the country had sufficient supply overall, outages, reserve shortages, and transmission limitations created tighter conditions in some regions.

“Market prices reflected these conditions and showed where additional supply, reserves, and transmission capacity were most needed,” Cacho said.

Can added supply, reserves, and transmission capacity help ease future electricity price pressures for consumers?

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