Meralco raises October residential power rate as generation costs climb

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Meralco raises October power rates

Highlights

Meralco will raise its October residential electricity rate by P0.3191 per kWh due to a P0.4973 per kWh rise in generation charges driven by higher natural gas prices and peso depreciation.
The Energy Regulatory Commission ordered Meralco to refund P2.64 billion in excess distribution charges, providing customers with a P0.1733 per kWh refund over six months, and set a new four-year revenue allowance of P342 billion.
Meralco reports sufficient power supply amid El Niño concerns, plans ongoing network maintenance, and urges users to practice energy efficiency as demand is expected to rise.

October rate increase and cost drivers

As reported by BusinessWorld, citing Meralco, the overall electricity rate for residential customers is rising by P0.3191 per kWh this October as higher generation charges offset declines in other components of the bill.

Meralco spokesperson Joe R. Zaldarriaga said generation charges increased by P0.4973 per kWh because of higher purchased power costs. He said higher natural gas prices amid the prolonged conflict in the Middle East and the peso's depreciation against the U.S. dollar are contributing to the increase, particularly for power supply agreements denominated in dollars.

Transmission charges, meanwhile, declined by P0.0063 per kWh. Meralco said ancillary service charges collected by the National Grid Corp. of the Philippines decreased by P0.1321 per kWh due to lower reserve market charges, while taxes and other charges posted a net decrease of P0.0398 per kWh.

Meralco said pass-through charges for generation, transmission and ancillary services are paid to suppliers and NGCP, while taxes, universal charges and other public policy charges are remitted to the government and relevant agencies.

Refund implementation and supply outlook

Meralco said recently approved adjustments to its distribution charges, along with a customer refund ordered by the Energy Regulatory Commission, are set for implementation in November.

The regulator ordered the utility to refund P2.64 billion in excess distribution charge collections linked to a delayed rate reset. Customers are set to receive a refund equivalent to P0.1733 per kWh over six months, while the commission also approved P342 billion in total revenue for Meralco over four years, allowing the distribution charge to rise to P1.48 per kWh from P1.35 per kWh.

Zaldarriaga said the company will review the order's contents once received and implement its provisions. Meralco also said it has secured enough electricity supply to meet requirements amid concerns about El Niño's potential impact on the power sector, while continuing maintenance and upgrades across its distribution network.

The company said it expects electricity demand to increase with higher temperatures and is urging customers to manage consumption through energy efficiency. It is also encouraging more commercial and industrial users to join the government's Interruptible Load Program, which allows participants to temporarily reduce demand from the grid during periods of tight electricity supply.

In our earlier report on the Philippine peso’s slip against the U.S. dollar, we noted the currency weakened amid renewed Middle East tensions that boosted demand for the safe-haven greenback. We also highlighted that softer foreign direct investment inflows added pressure, while traders stayed cautious ahead of key U.S. inflation data and potential signals on the Federal Reserve’s next policy move.

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