Manila Electric : Power rates up this July

Generation charge up due to simultaneous power plant outages

Lower Meralco distribution charge mitigates impact

Electricity rates will go up by around 3 centavos per kilowatthour (kWh) in July for a typical household consuming 200 kWh.This is equivalent to around P6 in the bill for July. This adjustment comes after two straight months that power rates have gone down, for a combined reduction of 89 centavos per kWh (5 centavos in May and 84 centavos in June).

Reasons for the upward adjustment are as follows: (i) higher generation charge, and (ii) higher transmission charge.

A reduction in Meralco's distribution charge, meanwhile, mitigated the increase in the aforementioned charges.

June supply affected by power plant outages

Generation charge for July went up by 10 centavos per kilowatthour (kWh) from P5.31 in June to P5.41. This was primarily due to the P0.26 and P0.10 per kWh increase in the average rate of suppliers with Power Supply Agreements (PSAs) with Meralco, and the rate of Independent Power Producers (IPPs), respectively. These were, however, partly offset by the P4.24 per kWh reduction in the average price of the Wholesale Electricity Spot Market (WESM), inclusive of line rentals and other adjustments.

Contributing to the increase in generation charge were the lower dispatch of a number of power plants due to their scheduled and unscheduled outages during the June supply month. These include: for scheduled outages - Pagbilao 1, San Lorenzo Units 50 and 60; for forced outages - Sta. Rita Unit 40, Calaca 1 and 2, Masinloc 1 and 2, Malaya 2, Ilijan 2, QPPL, San Lorenzo Units 50 and 60, GNPower-2 and Sual-1. The resulting thin reserves brought about by these outages likewise led to frequent declarations of Yellow and Red Alerts for the supply month compared to the previous months. The grid, for instance, was placed on Red Alert for four hours in June due to various generation and transmission-related troubles. Yellow alert, meanwhile, was experienced for 27 hours in June compared to only 25 in May, 8 in April and 6 in March. Yellow alert is reached when the total reserve is less than the capacity of the largest plant on line. For the Luzon grid, this is usually equivalent to 647 MW, or one unit of the Sual Power Plant.

A favorable peso-dollar rate coupled with cheaper coal prices tempered the increase in generation charge

In terms of share to Meralco's total power requirements for the June supply month, PSAs, IPPs, and WESM accounted for 53, 41, and 6 percent, respectively.

Adjustment in other bill components

Contributing to the overall upward adjustment in the bills to households is the P0.08 per kWh increase in transmission charge. According to the National Grid Corporation of the Philippines (NGCP), this was mainly due to higher ancillary charges, which accounted for around 40% of the total transmission cost for the July billing.

There was also a cumulative increase of P0.002 per kWh in subsidies and the system loss charge. Taxes, meanwhile, decreased by P0.003 per kWh.

Decrease in Distribution Charge

Mitigating the increases in the generation and transmission charges for a residential customer consuming 200 kWh isa P0.15 per kWh reduction in the distribution, supply, and metering charges of Meralco. The lower Meralco charges will remainfor the duration of Regulatory Year 2015 (RY2015), which is from July 2014 to June 2015.

Under the Performance Based Regulation (PBR), the annual revenue requirement, resulting indicative prices, and performance incentives have been approved before the start of the regulatory period from July 2011 to June 2015. For its part, Meralco has been able to improve its service to the customers by surpassing the standards set by the regulator. Because of this, customers now experience lesser interruptions, lower system losses and faster customer response time.

Completely pass through

Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers such as the plants selling to Meralco through the WESM and under the PSAs, as well as the IPPs. Payment for the transmission charge, meanwhile, goes to the National Grid Corporation of the Philippines (NGCP). Of the total bill, only the distribution, supply, and metering charges accrue to Meralco.

Call for Energy Efficiency

Meralco is reminding its customers to continuously practice energy efficiency. Meralco said that appliances should be in tip-top condition so as to maximize its reliability and efficiency. Turning off appliances and lighting not in use is also another way of managing consumption. For other energy efficiency tips and bright ideas, Meralco is also encouraging its customers to visit its website (www.meralco.com.ph), Facebook page (www.facebook.com/meralco) and Twitter account (@meralco).

Meralco added that given the number of scheduled outages of several large power plants for the rest of the year, it is of great importance to be vigilant in terms of supply adequacy.

Tables below show outages for the remaining months of year 2014

For other tips, customers may visit the Meralco website atwww.meralco.com.ph.

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