MANILA ELECTRIC Co. (Meralco) expects a slight uptick in electricity rates in January, as higher generation costs driven by peso weakness and the start of renewable energy (RE) fee collection may outweigh lower spot market prices.
“We are still awaiting the billings from our power suppliers but very initial indications show that there may be minimal movement in the electricity rates this month,” Joe R. Zaldarriaga, Meralco vice-president and head of corporate communications, said in a statement on Thursday.
He said the depreciation of the peso is putting upward pressure on generation charges, as a significant portion of power supply costs is denominated in US dollars. The peso closed at P58.79 a dollar on Dec. 29, weaker by P0.145 from its P58.645 close on Nov. 28.
Generation charges typically account for more than half of a customer’s monthly electricity bill.
Meralco said it is hoping that lower spot market prices will help cushion the impact of higher generation costs. During the December supply period, the average price in the Wholesale Electricity Spot Market (WESM) fell 15.4% month on month to P2.98 per kilowatt-hour (kWh), driven by a higher supply margin.
Adding to the potential rate increase is the collection of the green energy auction allowance, which amounts to an additional P0.0371 per kWh. The charge will appear as a separate line item in customers’ electricity bills starting this month.
Last month, the Energy Regulatory Commission approved the application of the National Transmission Corp. to collect the allowance, which serves as an incentive for renewable energy projects that were awarded contracts under the government’s previous green energy auctions.
“Nonetheless, we remain optimistic that the decrease in demand and consumption of customers will help manage the electricity bills this January,” Mr. Zaldarriaga said.
In December, Meralco’s overall electricity rate declined by P0.3557 per kWh to P13.1145 per kWh from P13.4702 per kWh in November, due mainly to lower transmission and generation charges.
Meralco is the country’s biggest power distribution utility, supplying electricity to Metro Manila and nearby provinces. Its franchise covers 39 cities and 72 municipalities, serving about 8 million customers.
Beacon Electric Asset Holdings, Inc. is Meralco’s controlling shareholder. Beacon is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera