POWER DISTRIBUTOR Manila Electric Co. (Meralco) expects a rise in its generation charge this month, as the peso’s depreciation is seen to drive up the cost of power purchased from its suppliers.
“While we are still waiting for some billings from our suppliers to finalize the October electricity rate, indications point to a possible increase in the generation charge this month,” Meralco Vice-President and Head of Corporate Communications Joe R. Zaldarriaga said in a statement on Tuesday.
He said the potential upward adjustment in the generation charge is due to the weakness of the peso, which affects the cost of power supply contracts that are mostly dollar-denominated.
The peso closed at P58.196 per dollar on Sept. 30, weakening by P1.07 from its P57.13 finish on Aug. 29, according to the Bankers Association of the Philippines’ reference exchange rate.
Meralco, however, is hoping that the upward adjustment will be offset by lower power prices at the Wholesale Electricity Spot Market (WESM), the electricity trading floor.
The average WESM rate system-wide fell by 33.8% month on month to P3.04 per kilowatt-hour (kWh) in September supply billing, according to the Independent Electricity Market Operator of the Philippines (IEMOP).
According to IEMOP, the decline is the lowest in the past seven months.
For Luzon alone, spot prices fell by 31.7% month on month to P2.57 per kWh.
The generation charge typically accounts for more than 50% of the monthly electricity bill.
In September, the overall rate dropped by P0.1852 per kWh to P13.0851 per kWh from P13.2703 per kWh the previous month, owing to a lower generation charge.
Meralco is the main power distributor for Metro Manila and nearby areas, covering 39 cities and 72 municipalities, and delivering power to around eight million customers.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of the PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera