Meralco customers brace for higher January bills

By Ashley Erika O. Jose, Reporter
TYPICAL HOUSEHOLDS in Metro Manila can expect their monthly electricity bills to go up by around P125 this month, after Manila Electric Co. (Meralco) said it will hike the overall rate due to an increase in the generation charge and the completion of refunds.
In a statement on Tuesday, Meralco said the overall rate for a typical household increased by P0.6232 per kilowatt-hour (kWh) to P10.9001 per kWh in January, from P10.2769 per kWh in December.   
Households that consume 200 kWh would see their monthly bills increase by around P125. Residential customers consuming 300 kWh, 400 kWh, and 500 kWh will see an increase of P187, P248, and P309, respectively, in their monthly bills.
Meralco attributed the January rate hike to the generation charge which rose by P0.3316 to P7.1291 per kWh from P6.7975 per kWh in December.   
Joe R. Zaldarriaga, Meralco spokesperson and head of corporate communications, said charges from the independent power producers (IPPs) also went up by P0.4070 per kWh as First Gas-Sta. Rita used more expensive alternative fuel due to the lack of supply of Malampaya natural gas.
However, the peso appreciation, which affected 97% of IPP costs that are dollar-denominated, tempered the further increase of power rates.
In December, IPPs supplied 46% of Meralco’s energy requirement.   
The peso closed at P55.76 against US dollar on Dec. 29, 2022 gaining 88 centavos from its close of P56.64 per dollar on Nov. 28, 2022. 
Wholesale Electricity Spot Market (WESM) charges went up by P0.6808 per kWh as the secondary price cap was triggered 61% of the time in December.
Last month, the Luzon grid was placed under yellow alert due to thin power supply after several power plants experienced forced outages.   
Meralco also sourced more of its energy supply from WESM in December, increasing the latter’s energy share to 9% from 7%. This came after South Premiere Power Corp. (SPPC) withdrew its power supply agreement (PSA) with Meralco effective on Dec. 7.
SPPC’s deal with Meralco had covered 670 megawatts (MW) of capacity for a period of 10 years starting in 2019 at P4.2455 per kWh.   
In November, the Court of Appeals (CA) issued a temporary restraining order (TRO) in favor of SPPC suspending the implementation of its PSA with Meralco.   
To mitigate the impact of SPPC’s withdrawal, Meralco then secured an emergency PSA (EPSA) with Aboitiz Power Corp. (AboitizPower) on Dec. 15 until Jan. 25 at P5.96 per kWh.   
AboitizPower will source the supply from its GNPower Dinginin Ltd. Co., but it only covers 300-MW baseload capacity. Meralco is sourcing the remaining 370 MW it lost from the SPPC power deal from WESM.   
“Due to the cessation or suspension of SPPC PSA, we had to procure power in the spot market and enter into emergency PSA but hopefully the situation will be much better,” Mr. Zaldarriaga said.
Lawrence S. Fernandez, vice-president and head of utility economics of Meralco, said that it cannot say at the moment whether AboitizPower will extend its contract with Meralco.   
“GNPower said they will also need to see what their costs are going to be at that time, Meralco is still calling suppliers for supply apart from GNPower so we will see what will happen as we approach Jan. 25,” Mr. Fernandez said. 
Also, the completion of the distribution-related refunds amounting to P0.2761 per kWh for residential customers contributed to the higher rate this month, Mr. Zaldarriaga said.
Two distribution-related refunds are still being implemented by Meralco. These refunds, amounting to P1.0579 per kWh, will be completed by January and May which will be reflected in February and June billing period.
Meanwhile, Mr. Fernandez urged the public to practice energy efficiency following the Department of Energy’s (DoE) warning of thin power reserves this year.
“For summer 2023, we are conducting biddings for short-term PSAs, one for 180-MW and another for 300 MW to help customers be shielded from spot market prices. We will try to mitigate the impact of the expected supply tightness,” Mr. Fernandez said.   
The DoE said it expected deficient reserves for seven months this year, it also places the whole of May as critical period due to expected surge in power demand.   
Separately, Meralco said it will now proceed with negotiations for its 200-MW baseload energy requirement after no challenge was submitted on the second round of competitive selection process (CSP) for Solar Philippine Batangas Baseload Corp.’s (SPBBC) proposal.   
SPBBC will source the power it will supply to Meralco from solar and battery.   
Meralco said its third-party bids and awards committee (TPBAC) did not receive “any competitive bids from any challenger during the bid submission deadline on Jan. 10.”   
The power distributor added that because there is no outstanding dispute during the previous rounds of competitive challenge it can now negotiate for the contract capacity requirement.   
SPBBC’s offer to Meralco covers 20-year contract beginning in 2024 at a rate of P4.65 per kWh.   
“Once negotiations are completed, Meralco will enter into a PSA with the original proponent and seek regulatory approval for the contract,” Meralco said.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., 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.