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After two straight months of reduction, the Manila Electric Co. (Meralco) is increasing electricity rates for the month of September as costlier fuel and weaker local currency pulled up generation costs, according to a report by GMA News.

In a statement, Meralco said the overall rate for a typical household was hiked by 39.07 centavos per kilowatt-hour (kWh) this month to P9.9365/kWh from P9.5458/kWh in August.

The rate adjustment translates to an increase of around P78 in the total bill of residential customers consuming 200 kWh for the month.


Meralco said that higher fuel cost and weaker peso caused the generation charge to go up.

It said that generation charge for September increased by 35.81 centavos to P6.9393/kWh from P6.5812/kWh in the prior month.

Meanwhile, charges from the Independent Power Producers (IPPs) and Power Supply Agreements (PSAs) also went up by 80.26 centavos and 33.16 centavos per kWh, respectively, “driven by higher fuel costs and peso depreciation.”

Meralco said the ongoing Malampaya gas supply restriction necessitated the increased use of more expensive alternative fuel by First Gas Sta. Rita and San Lorenzo to ensure continuous supply.


The company said peso depreciation also pushed up charges from the IPPs and PSAs since 98% of total IPP costs and 36% of PSA costs are dollar-denominated.

The continued rise in international coal prices also contributed to the PSA rate increase, it added.

Meralco said that higher PSA and IPP costs were partly mitigated by lower charges from the Wholesale Electricity Spot Market (WESM), which registered a reduction of P3.7473/kWh as the supply situation in the Luzon grid improved.

With the decrease in average daily peak demand, there was no Yellow Alert in August and the frequency of secondary price cap imposition went down to 4.7% of the time from 27.62% in July, it said.

The PSAs, IPPs, and WESM accounted for 48%, 42%, and 10%, respectively, of Meralco’s energy requirement for the period.

On the other hand, transmission charge for residential customers decreased by 43 centavos per kWh due to lower Ancillary Service charges.

Taxes and other charges also registered a net increase of 7.58 centavos per kWh, including the additional 2.39 centavos per kWh to the Universal Charge for Missionary Electrification (UCME) as recently ordered by the Energy Regulatory Commission (ERC). 

With this adjustment, Meralco said universal charges now total 22.28 centavos per kWh from 19.89 centavos per kWh.

The company added that pass-through charges from generation and transmission are paid to the power suppliers and the system operator, respectively, while taxes, universal charges, and Feed-in Tariff Allowance (FIT-All) are all remitted to the government.

Meralco said that it only earns from distribution, supply, and metering charges, which went down by 3.60 centavos per kWh in August for a typical residential customer.

Prior to this adjustment, the company said that distribution charges were unchanged since the reduction in July 2015.

The ongoing distribution-related refunds, equivalent to a total refund rate of P1.8009/kWh for residential customers, also continue to temper customers’ monthly bills, according to Meralco.

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