MANILA, Philippines — Electricity consumers will face another round of rate hikes this month as Manila Electric Co. (Meralco) recently revealed an increase of P0.5738 per kilowatt-hour (kWh) due to rising fuel expenses in anticipation of the upcoming summer season.
This adjustment results in a total rate of P11.9168 per kWh for an average household. For households using 200 kWh, the hike translates to an approximate P115 increase in their electricity bills.
Meralco reports an increase in charges stemming from independent power producers (IPPs) and power supply agreements. These increments are evident in the generation charge, representing over 50% of the total bill and reflecting the cost of power procurement from suppliers.
The per kilowatt-hour (kWh) generation charge has surged from P6.6468 to P7.1020, attributed to two natural gas-fired power plants importing more fuel.
Furthermore, the depreciation of the peso has also played a role in the hike of IPP charges, with Meralco noting that these charges are 96% dollar-dominated.
Joe Zaldarriaga, the spokesperson for Meralco, has highlighted that demand is expected to rise in March as the dry season begins. He assured that Meralco is prepared to handle this increase in demand by securing additional capacity from contracted suppliers.
Recently, a subsidiary of the conglomerate San Miguel Corp. emerged as the top bidder in Meralco’s auction for 1,200 megawatts (MW) of capacity, which is aimed at addressing the escalating demand caused by the El Niño climate pattern. Additionally, companies under San Miguel and Aboitiz also presented the best offers to fulfill a separate 1,800-MW supply requirement.
The Return of the Fit-All Collection Sparks Rate Hike
The recent resurgence of the Feed-in Tariff Allowance (Fit-All) collection, a standardized charge of P0.0364 per kilowatt-hour paid by consumers to support renewable energy initiatives, has contributed to the rise in rates this month, as per Meralco. This initiative, aimed at incentivizing renewable energy developers, is mandated by the Electric Power Industry Reform Act of 2001, which emphasizes the importance of financial incentives in the energy sector.
The Energy Regulatory Commission (ERC) had suspended Fit-All collection for a year, but last month, it lifted the suspension due to concerns about a potential shortfall in the Fit-All fund. ERC Chair Monalisa Dimalanta had previously highlighted that as of January 5, only P2.98 billion remained in the fund.
With a monthly payout of P2.2 billion to renewable energy developers, the regulator saw the necessity of resuming Fit-All collection to replenish the fund and ensure ongoing support for renewable energy initiatives.
Fit-All charges are categorized under Meralco’s “transmission and other charges,” which experienced a net increase of P0.1186 per kilowatt-hour. However, Meralco also noted a decline of P0.4061 per kilowatt-hour in spot market charges, which helped offset the overall increase, especially with improvements in power supply within the Luzon grid, a region known for its high energy consumption.
