Rising fuel prices and the depreciation of the peso could lead to higher power rates next month, according to the Manila Electric Co. (Meralco)
But Lawrence Fernandez, Meralco vice president and head of utility economics department, said better power supply may cause a reduction in generation charges.
Fernandez said current supply is back to normal compared to the first few weeks of June.
This, he said, caused a reduction in wholesale electricity spot market charges which will be reflected in the August generation charge.
“We need to continue monitor(ing) the peso movement, hopefully it does not continue to depreciate. In terms of fuel prices, we observed that crude oil increased and next month, we will also see the re-pricing of Malampaya gas to update it based on more recent crude oil prices,” Fernandez added.
On Friday, Meralco announced power rates will slightly go up by P0.2353 per kilowatt hour (kWh) this month, mainly pushed by higher charges in the WESM.
The fourth consecutive upward rate adjustment will be equivalent to an increase of around P47 in the bill of a residential customer consuming 200 kWh monthly and brings overall power rates to P8.9071 per kWh from last month’s P8.6718 per kWh.
Meralco said this month’s rate increase is tempered by the implementation of the distribution rate true-up refund which began last March. The company will return around P13.9 billion over a period of 24 months or until the amount is fully refunded equivalent to P0.2761 per kWh for residential customers and appears in bills as a line item called dist true-up.
The company said the generation charge for July is at P4.8707 per kWh, a P0.2536 per kWh increase from last month’s P4.6171.
Meralco said WESM charges remained high at P8.7424 per kWh due to tight supply conditions in the Luzon grid last month paired with the ongoing Malampaya natural gas supply restriction.
Meanwhile, charges from independent power producers (IPPs) also increased by P0.1929 per kWh, affected by the reduced gas supply from Malampaya and Peso’s depreciation.
Cost of power from power supply agreements (PSAs) decreased by P0.0521 per kWh while transmission charges also registered a reduction of P0.1463 per kWh due to a significant decrease in ancillary service charges but taxes and other charges registered an increase of P0.1280 per kWh.
Meralco’s interim distribution rates comprised of distribution, supply and metering charges, the only bill component paid to the company remained at P1.381 per kWh for 72 months already.
The company said that the total power requirements for the month were accounted to 7.8 percent from WESM, 39.5 percent from IPPs and 52.7 percent from PSAs.
The Independent Electricity Market Operator of the Philippines (IEMOP) said the recent implementation of WESM into the 5-minute trading interval from the previous 60-minutes resulted in more accurate demand power forecasting.
IEMOP said regional demand forecast accuracy (RTD) resulted to as high as 99.21 percent in Luzon, 98.99 percent in Visayas and 98.66 percent in Mindanao.
“Through the shift to the five-minute market design, WESM is now up par with the electricity market of other more developed countries such as those of the United States and Australia; thereby, making the Philippine WESM one of the technologically advanced markets in the global industry standards,” the firm said.
The five-minute trading interval system now used in the WESM is also expected to further pull down power prices as it provides more competition among power producers. – J. Macapagal
