March 2022 Rates Updates
Following two consecutive months of reductions,
power rates slightly inch up in March
Date updated: March 18, 2022
After two consecutive months of rate reductions, the Manila Electric Company (Meralco) announced today that the overall rate for a typical household slightly went up by P0.0625 to P9.6467 per kWh from last month’s P9.5842 per kWh. This is equivalent to an increase of around P13 in the total bill of a residential customer consuming 200 kWh.
Additional Distribution True-Up Refund Mitigates Increase
The overall increase in this month’s power rates would have been higher if not for the implementation of an additional Distribution Rate True-Up refund.
To recall, Meralco’s proposal to refund around P13.9 billion distribution-related charges was approved by the Energy Regulatory Commission (ERC) in early 2021. This is equivalent to a rate refund of P0.2761 per kWh for residential customers, implemented beginning March 2021.
This amount represented the difference between the Actual Weighted Average Tariff and the ERC-approved Interim Average Rate for distribution-related charges for the period July 2015 to November 2020.
On March 7, 2022, Meralco received an ERC Order dated February 23, 2022 expanding the coverage of the refund to include the December 2020 to December 2021 period – amounting to an additional P4.8 billion. For residential customers, the refund is equivalent to another P0.1923 per kWh that will be implemented over a period of 12 months.
Residential customers will see a total of P0.4684 per kWh refund under line item called “Dist True-Up” in their bills this month.
High WESM prices, Peso depreciation drive generation charge
Generation charge went up by P0.2780 to P5.4737 this month from the P5.1957 per kWh registered the previous month, mainly due to higher charges from the Wholesale Electricity Spot Market (WESM).
Despite improvement of supply conditions in the Luzon grid, WESM prices remained elevated in February and the secondary price cap was imposed 5.63% of the time. With the increase in demand and the scheduled maintenance outage of Quezon Power and First Gas-San Lorenzo plants, Meralco sourced additional supply from the WESM in the February supply month. As a result, WESM charges increased by P13.4211 per kWh.
Charges from Independent Power Producers (IPPs) also increased by P0.1625 per kWh mainly due to the lower dispatch of Quezon Power and First Gas-San Lorenzo. Quezon Power is on scheduled maintenance outage since February 5, while First Gas-San Lorenzo Modules 60 and 50 are on maintenance outage since January 20 and February 14, respectively. These maintenance shutdowns were performed to ensure availability of their supply during the summer months and the election period. Peso depreciation against the US dollar also contributed to the increase in IPP costs, since around 97% of these costs are dollar-denominated.
Charges from Power Supply Agreements (PSAs) were higher by P0.1510 per kWh, as the dispatch of First NatGas-San Gabriel plant continued to be affected by Malampaya facility’s inability to supply sufficient natural gas. Lower excess energy deliveries, which are priced at a discount, also contributed to the increase in PSA costs.
During the supply month, WESM, IPPs and PSAs accounted for 13.9%, 32.7%, and 53.4%, respectively, of Meralco’s energy requirement.
This month’s generation charge increase would have been significantly higher, but Meralco took the initiative to cushion the impact in the bills of its customers by coordinating with some of its suppliers to defer collection of portions of their generation costs. These deferred charges will subsequently be billed on a staggered basis over the next three months as directed by the ERC.
Transmission and Other Charges
Transmission charge, taxes, and other charges for residential customers registered a net decrease by P0.0232 per kWh. The collection of the Universal Charge-Environmental Charge amounting to P0.0025 per kWh remains suspended, as directed by the ERC.
Meralco reiterated that it does not earn from the pass-through charges from generation and transmission, as payments go to the power suppliers and the system operator, respectively, while taxes, universal charges, and Feed-in Tariff Allowance (FIT-All) are remitted to the government.
Distribution, supply, and metering charges, which are the only costs that go to Meralco, have remained unchanged since its reduction in July 2015.
Customers urged to practice energy efficiency
In the succeeding months, Meralco expects that the continuing increase on global fuel prices would have a significant impact on power rates, particularly on the generation charge, and urges its customers to be extra efficient when using electricity.
Being energy efficient will also help them better manage their consumption, which historically increases by 10 to 40% during the summer months.
Meralco advises its customers to know how much their gadgets and appliances consume through the Appliance Calculator in the Meralco Mobile App as this will help them stay in control and manage their monthly budget better.
Customers can also save on energy consumption when energy efficiency practices are done right. Keep the airconditioning unit (ACU) on when leaving the house for a quick one-hour errand. This is 17% more cost-efficient because by turning it off, the ACU compressor works harder to cool the room again leading to an increase in consumption.
When leaving the house for just two days, it is 12% more cost efficient to keep refrigerators on instead of turning them off.
For more bright ideas and energy efficiency tips, customers may also visit www.meralco.com.ph/brightideas or follow Meralco on Facebook www.facebook.com/meralco and Instagram: @meralcoph.
Please refer to below chart on the Distribution True-Up Refund:
| Customer Class | Distribution True Up 1 (Implemented since March 2021) - PhP/kWh - |
Distribution True Up 2 (Implemented since March 2022) - PhP/kWh - |
Distribution True Up as Reflected in March 2022 Bills (DRTU1 + DRTU2) - PhP/kWh - |
| Residential and General Service A | (0.2761) | (0.1923) | (0.4684) |
| General Service B | (0.1811) | (0.1262) | (0.3073) |
| General Power | (0.0789) | (0.0549) | (0.1338) |
| GHMSCI | (0.1165) | (0.0812) | (0.1977) |
| Flat Streetlights | (0.2870) | (0.1999) | (0.4869) |
| Generator Wheeling | (0.0366) | (0.0255) | (0.0621) |
| AVERAGE | (0.1528) | (0.1064) | (0.2592) |
