Meralco raises generation charge estimate
From an initial estimate of up to P2.5 per kilowatt hour (kwh) increase in the generation charge, consumers may now have to pay nearly P4 per kwh more in their December bill, the highest ever rate increase by the power distribution firm, Manila Electric Co. (Meralco).
Meralco President Oscar Reyes said the Malampaya shutdown, which forced the company to get bulk of its supply from the Wholesale Electricity Market (WESM), caused the power rates to dramatically rise.
In the distributor’s initial estimate, the maintenance of the platform would only cause as much as P2 to P2.5 per kwh hour. Now, it is already P3.4397 per kwh which, according to Reyes, is the “highest increase to date” as far as the generation charge is concerned.
The generation charge, the largest item in the consumers’ electricity bill, is the cost of power Meralco purchases from its suppliers.
It was earlier announced that Malampaya, which provides the bulk of Luzon’s power, will continue to operate except that it will run using a highly expensive liquid fuel, instead of natural gas.
“That will be one of the reasons that the generation charge will increase, the higher price from Malampaya, and the second is potentially higher WESM prices,” Reyes said.
“The problem is we don’t know how the WESM will behave. The WESM movement is very volatile,” he pointed out.
The Malampaya maintenance shutdown will be from November 11 to December 10. Originally, the maintenance was set from November 9 to December 8.
The official estimate regarding power rate adjustments for this month is still to be announced on December 9, but Reyes said it was unlikely the predicted rate would change.
Meralco said it has the option to charge the adjustment in tranches to spare consumers of a single huge billing.
Specifically, instead of charging the nearly P4-increase per kwh in December billing alone, the distributor will charge it in two tranches where the other part of the increase will reflect in the January bill.
Reyes said the target is to have the rate adjustments due to the Malampaya shutdown normalize by February.
“We are in discussions on how to handle this,” he further said. “We’re thinking of how to cushion the impact and make the second tranche [of the specific power rate hike]during a month that the price is slightly low.”
It was reported earlier this week that the maintenance shutdown of the Malampaya natural gas field will cause as much as a P2.5 per kwh increase.
“We just reiterated our prior advisories for customers to expect significant generation charge increase this December. Based on previous experiences, the generation charge spikes up whenever the Malampaya pipeline goes on extended shutdown,” Meralco utility economics head Lawrence Fernandez said.
With the projected generation charge adjustment, a typical household consuming monthly average 200 kilowatt-hour will experience an increase of about P500 in their bill. This is significantly higher than a normal generation charge increase of just about P200.
On Friday, Malacañang urged Meralco and other private companies to consider their corporate social responsibility in implementing rate adjustments.
In a press conference, Presidential Communications Secretary Herminio Coloma Jr. said that corporate social responsibility must be considered by all private corporations in situations such as natural calamities.
”Sana naman po ay maramdaman din ito ng ating mga private companies. Marami po sa kanila ay known advocates of corporate social responsibility so that in their . . . As they carry on their activities, they will take this into account na iyon pong ability nila to earn revenues and profits may have to be tempered especially when their activities are in calamities zones where there’s a lot of sacrifice that is already made by their consumers,” he added.
Coloma said the government was not singling out any company but noted that they are just reminding them that all “power utilities, distributors, and other players in the electric power industry are treated fairly by government in accordance with law.”
”Having said that, we also emphasize that we do not and will not condone abuses of these companies,” he said.
Although Meralco’s distribution area does not cover the areas directly hit by the disasters, many of the victims of Super typhoon Yolanda depend on the support of their relatives in Luzon, other parts of the Visayas and even in Mindanao.
This means that if the company raises its rates by P3.50 per kwh, consumers who consumed 200 kwh would pay P700 more, those who used 300 kwh, P1,050 more, for 400 kwh, P1,400 more, and for 500 kwh, an additional P1,750 for the month.
The Malampaya platform fuels three power plants in Luzon, which supplies 40 percent of the electricity requirement of the Luzon grid.
Coloma said the government will protect the public from unreasonable power rate adjustments.
”We will hold public utility firms accountable by enforcing appropriate sanctions in case of apparent abuse,” he said.