Palace defends Meralco’s latest price hike as ‘market driven’

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Malacanang on Wednesday defended the decision of Manila Electric Co. (Meralco) to charge its customers 89 centavos per kilowatt-hour (kWh) for April, saying it 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,” Coloma said, but added that government “continues to monitor electricity price movements to ensure that these are neither excessive nor exorbitant.”

He pointed out that only one of the two Malaya plants is operational because the other is down for repairs and is not expected to return online for two weeks.
Coloma said Energy Secretary Carlos Jericho Petilla assured 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 announced the 89-centavo hike for April, after two consecutive months of reduced electricity rates.
It said the generation charge – the cost of power sold by power producers to distribution utilities like Meralco – has risen along with other components of the electricity bill.
There will be a 69-centavo per kwh increase in the generation charge, from P5.21 in March to P5.90 this month.
Meralco attributed the increase to the P16.69 per kWh jump in Wholesale Electricity Spot Market (WESM) prices, from P4.90 in February to P21.59 in March.
Though demand for March rose, Meralco sourced only about 4 percent of its power from WESM.

With Meralco’s purchase from the WESM the previous month being at around the same level, WESM rates increased because of higher prices at the market.
A 20-centavo per kWh increase in the average cost of power sourced to the Power Supply Agreements (PSAs) was mostly offset by a 19-centavo 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.

PSAs accounted for 51 percent of Meralco’s total power requirements, and IPPs, 45 percent.
Meralco said transmission charges rose by 3 centavos and taxes by 11 centavos. System loss charge also registered an increase of 6 centavos per kWh.
In March, consumers saw a 45-centavo per kWh reduction in their billing mainly because of a lower generation charge.


CATHERINE S. VALENTE

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