Malacañang on Wednesday defended the decision of Manila Electric Co. (Meralco) to increase its generation charge, saying the rate adjustment of 89 centavos per kilowatt-hour (kWh) is “based on market-driven pricing.”
Presidential Communications Secretary Herminio Coloma Jr. echoed Meralco’s statement that the primary reason for the rate increase was “the tight supply condition brought about by the outage of several large power plants, coupled with an increase in demand.”
“The reported increase in Meralco’s generation charge is based on market-driven pricing.
The government continues to monitor electricity price movements to ensure that these are neither excessive nor exorbitant,” Coloma said.
According to him, the Malaya plants have been commissioned since March. At present, he said, only Malaya 2 is operational due to ongoing repair and maintenance work on Malaya 1, which is expected to return on-line within two weeks.
Coloma noted that Energy Secretary Carlos Jericho Petilla has given assurances that his department “is closely monitoring the day-to-day energy situation in view of tight supply with the onset of the summer months.”
Meralco earlier announced that there would be an increase of 89 centavos per kWh in April after two consecutive months of reduction in electricity rates.
It cited the generation charge or the cost of power sold by power producers to distribution utilities, along with other components of the electricity bill, registering upward adjustments.
There will be a P0.69 per kWh increase in the generation charge or cost of producing power, from P5.21 per kWh in March to P5.90 per kWh this month.
The increase was primarily driven by the significant spike in the Wholesale Electricity Spot Market (WESM) prices to P21.59 per kWh during the March supply month from P4.90 per kWh in the previous month, for an increase of P16.69 per kWh.
Though power demand in March increased, Meralco only obtained about 4 percent of its power requirements from WESM. With Meralco’s purchase from the WESM the previous month being at around the same level, WESM rates, therefore, increased because of higher prices on the market.
Meanwhile, a P0.20 per kWh increase in the average cost of power sourced to the Power Supply Agreements (PSAs) was mostly offset by a P0.19 per kWh reduction in the rates of the Independent Power Producers (IPPs).
PSAs increased from P4.57 per kWh to 4.77 per kWh, while IPP rates dropped from P5.63 per kWh to P5.44 per kWh. In terms of share to Meralco’s total power requirements, PSAs and IPPs accounted for 51 percent and 45 percent, respectively.
PSAs remained the lowest cost source of supply, Meralco said.
It added that transmission charges and taxes also went up by P0.03 and P0.11 per kWh, respectively. System loss charge also registered an increase of P0.06 per kWh.
In March, electricity consumers saw a 45-centavo per kWh reduction in their electricity billing because the generation charge, along with other components of the electricity bill, fell.
Catherine S. Valente