MANILA, Philippines, September 7 ------ Upward pressure on the generation charge could push rates of Manila Electric Co. (Meralco) higher this September, potentially ending two successive months of rate reductions implemented by the company. “Although we have yet to receive the final billings from our suppliers, there may be upward pressure on the generation charge this month,” Meralco vice president and head of corporate communications Joe Zaldarriaga said.
The generation charge accounts for more than half of the electricity rate. It is a pass-through charge that is paid to the power suppliers, and Meralco only earns from distribution, supply and metering charges. Meralco’s generation costs are usually influenced by the exchange rate, the supply-demand situation and its effect on wholesale electricity spot market (WESM) prices, and international fuel prices. Zaldarriaga said the expected increase in generation charge is driven by higher fuel prices in the world market during the supply month. He said the depreciation of the Philippine peso against the US dollar is likewise seen having an impact on the charges from Meralco’s suppliers for the incoming billing month. “We hope that these can somehow be mitigated by lower WESM charges that may result from lower demand and lower average capacity on outage,” Zaldarriaga said.
Data from the Independent Electricity Market Operator of the Philippines earlier showed that average WESM prices for Luzon and Visayas decreased to P5.43 per kilowatt-hour as of Aug. 17 from P5.66 per kWh last month. This comes as supply for the period stood at 15,396 megawatts, higher than the previous month’s 14,917 MW, while demand went down to 11,283 MW from 11,386 MW in July. Meralco rates have gone down for two consecutive months, with overall rate for a typical household in August declining by P0.2908 per kWh to P10.8991 per kWh from P11.1899 in July. The combined reduction in Meralco rates over the past two months amounted to P1.0121 per kWh. The reduction in its rates last month, in particular, was fueled primarily by lower generation charge in the July supply month.
Meralco is the largest electric power distribution company and the biggest private sector utility in the country. The company provides electric service within its franchise coverage and has a consolidated customer count of 7.716 million as of end-June.
Source: philstar.com
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