Meralco sees generation charge hike for July

MANILA Electric Co. (Meralco) is anticipating an increase in the generation charge this month as it begins to collect the previously deferred estimated payment of P0.77 per kilowatt-hour (kWh).

“We may expect strong pressures for the generation charge to increase this July,” Meralco Vice-President and Head of Utility Economics Lawrence S. Fernandez said in a statement on Monday.

This follows a reduction in June due to an Energy Regulatory Commission (ERC) directive, with charges from the Wholesale Electricity Spot Market (WESM) expected to normalize.

In June, Meralco reduced its rate to P9.4516 per kWh from P11.4139 per kWh in May, reversing an earlier announced hike.

The generation charge decreased by P1.8308 per kWh, contrary to the previously announced increase of P0.3466 per kWh.

Previously, the ERC mandated distribution utilities to stagger the collection of charges related to WESM purchases over a four-month period starting from June to September.

Meralco, along with Quezon Power (Philippines) Ltd., San Buenaventura Power Ltd. Co., and South Premiere Power Corp., deferred the collection of P500 million in generation costs last month to mitigate the impact of higher pass-through charges.

This deferred amount will be recovered from customers over the July-to-September billing cycle.

In addition to the normalization of WESM charges, there will be an impact from the amortization of deferred charges, estimated at 77 centavos per kWh, Mr. Fernandez said.

He noted that WESM charges were affected by red alerts on the Luzon grid early in the June supply month, but expects this impact to be mitigated by reduced demand during the rainy season.

In June, the average WESM price system-wide declined by 25.2% to P6.15 per kWh due to decreased demand, according to the Independent Electricity Market Operator of the Philippines.

Meralco’s majority owner, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.

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