Manila Electric : Rate increase for March lower than projected despite Malampaya shutdown

Meralco petition to stagger incremental fuel cost over three months approved by ERC

MANILA, PHILIPPINES, 9 March 2017 - Meralco announced that the increase for March 2017 for a typical residential household will amount to PhP0.66 per kWh, thereby bringing the overall rate to PhP9.67 per kWh from last month's rate of PhP9.00 per kWh. This amounts to a PhP132 increase in the total bill of a typical residential household consuming 200kWh.

The rate increase this month is mostly due to the upward movement in the generation charge, caused mainly by the 20-day Malampaya Maintenance Shutdown which took place from January 28 to February 16 this year. The shutdown affected the natural gas supply to the Ilijan, Sta. Rita and San Lorenzo plants which supply an aggregate capacity of 2,565 MW to Meralco's franchise area. With the shutdown, these plants had to switch from natural gas to more expensive liquid fuel so that they can continue supplying power to the grid.

The Malampaya shutdown also coincided with the scheduled maintenance of other power plants such as SEM-Calaca Power Corp. Unit 1, Quezon Power (Philippines), Ltd., and one block of the Ilijan power plant, which collectively contributes some 1,185 MW of Meralco's power requirements.

Staggering of Incremental Liquid Fuel Cost to Help Mitigate Impact on Consumers

Meralco appreciates the timely action of the Energy Regulatory Commission (ERC) on its petition to stagger the incremental liquid fuel cost over three months, or from March to May 2017. This staggered scheme will help mitigate the effect of the Malampaya shutdown on consumers' bills.

In Meralco's application filed last January 31, 2017, the incremental liquid fuel cost was estimated at PhP2.417 Billion, using certain assumptions, equivalent to around PhP0.92 per kWh. Based on actual suppliers' billings provided to ERC last Friday, March 3, the incremental cost was lower at PhP1.752 Billion, or approximately PhP0.66 per kWh, the collection of which will be staggered over three months.

Overall generation charge this month increased by PhP0.58 per kWh to PhP4.90 per kWh. This already includes one-third of the differential amount computed by the ERC.

This month, there was a decrease of PhP0.03 per kWh in power supplied through Meralco's Power Supply Agreements (PSAs) and Interim Power Supply Agreements (IPSAs). The share of PSAs and IPSAs this month stood at 41.2%.

Meanwhile, the overall increase in the rate of IPPs was at PhP0.63 this month. The share of IPPs was at 33.4%.

Overall charges from the Wholesale Electricity Spot Market (WESM) increased by PhP1.68 per kWh in February 2017 due to higher capacity on outage. Power demand in the Luzon Grid this month also increased by around 253 MW on the average. The share of WESM purchases to Meralco's total requirements went up from 23.2% to 25.4%.

In summary, the power situation during the Malampaya shutdown was normal throughout, and this led to spot prices being lower than what they were forecasted end of last year. Meralco commends the Department of Energy (DOE) for leading the industry during the shutdown and ensuring reliable and consistent power supply throughout the entire period.
Adjustments in other bill components

There was a slight decrease in the transmission charge of residential customers of PhP0.01 per kWh. Taxes and other charges went up by a combined amount of around PhP0.09 per kWh.

Meralco's distribution, supply, and metering charges, meanwhile, have remained unchanged for 20 months, after these registered reductions in July 2015. 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, while payment for the transmission charge goes to the National Grid Corporation of the Philippines (NGCP).
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