October Rates Slightly Up
After Five Consecutive Months of Reduction, Power Rates Are Slightly Up For October 2020
Higher demand causes increase in generation charge.
By Cris Laraño
Published October 20, 2020
After five consecutive months of overall power rate reduction, Meralco announced a slight upward adjustment of power rates, as the overall rate for a typical household inched up by P0.1212 per kWh, from last month's P8.4288 per kWh to P8.5500 per kWh this October.
This month’s overall rate is still significantly lower by P0.5362 per kWh compared to October 2019, which was at P9.0862 per kWh. The net rate reduction since the start of the year is still well over one peso per kilowatt hour.
Higher generation charge brought about by tighter supply conditions in the Luzon grid
From P4.0860 per kWh in September, the generation charge increased by P0.1373 per kWh to P4.2233 per kWh this October. After six straight months of reduction totaling P0.5772 per kWh, the October generation charge is still P0.4399 per kWh lower than in March.
This month’s increase in generation charge is mainly due to higher Wholesale Electricity Spot Market (WESM) charges, brought about by tightened supply conditions and higher demand.
The Malampaya natural gas restriction from August 28 to September 6 and forced outage of several large plants in the first week of September tightened the supply conditions in the Luzon grid. This led to WESM prices hitting the offer cap of P32 per kWh, the highest this year, on September 5 and 7 despite the absence of Yellow Alerts. Higher Luzon demand and more generation capacity on outage resulted in P1.1605 per kWh increase in WESM rate. Had WESM prices remained at their August 2020 levels, the generation charge and the overall rate this month would have decreased by 8 centavos and 14 centavos, respectively.
After being placed under MECQ in August, a rise in the Luzon demand was observed in September with the return to GCQ in Metro Manila and adjacent areas. From August 2020’s peak demand of 10,422 MW, peak demand in September was higher at 10,570 MW. September 2020’s peak was also higher than September 2019’s 10,392 MW, the first time since the start of the pandemic that demand exceeded its year-ago level.
Charges from Power Supply Agreements (PSAs) also increased by P0.1044 per kWh as there were no more Force Majeure (FM) claims for September supply, with the rise in demand. FM claims in the preceding month amounted to P463 million. On the other hand, purchases from Independent Power Producers (IPPs) decreased by P0.0174 per kWh mainly due to higher average plant dispatch
WESM, PSAs, and IPPs accounted for 19 percent, 47 percent, and 34 percent of Meralco’s energy requirements, respectively.
Movements in other charges
Transmission charge, taxes, and other charges for residential customers registered a slight reduction of P0.0161 per kWh.
Collection of the Universal Charge-Environmental Charge amounting to P0.0025 per kWh remains suspended, as directed by the ERC.
Meralco’s distribution, supply, and metering charges, meanwhile, have remained unchanged for 63 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 NGCP. Taxes and other public policy charges like the Universal Charges and the FIT-All are remitted to the government.
To learn more, call 16210 or email us at customercare@meralco.com.ph.
Story originally posted on Power Club.