Meralco expects slight rate hike in October

Published October 5, 2020, 12:25 PM

by Myrna M. Velasco

Given electricity demand increase in the Luzon grid last month, power utility giant Manila Electric Company (Meralco) is anticipating marginal rate hike to be reflected in their customers’ October bills.


“Initial data suggest that generation charge costs for October will have a possibility of slight increase due to higher demand in the Luzon grid and more generation capacity on outage,” Meralco Spokesperson Joe Zaldarriaga indicated.

He qualified the power utility firm has yet to receive all billings from its power suppliers, but it is targeting to announce rate adjustments this week.

Zaldarriaga explained that when most areas in Luzon, including Metro Manila, returned to general community quarantine (GCQ) last September, following a two-week stricter lockdown or modified enhanced community quarantine (MECQ) in August, electricity demand went up mainly due to increased economic activities.

“From August 2020’s peak demand of 10,422 megawatts, September 2020 peak demand increased to 10,570MW,” he pointed out.

The Meralco executive emphasized that the peak demand logged in September was considerably higher compared to last year’s 10,392MW on a comparative month.

Zaldarriaga correspondingly noted the last supply month “was the first time since the start of the pandemic that demand exceeded its year-ago level.”

“This may mean that businesses are resuming operations and the economy is transitioning to the new normal,” he said.

Aside from the forced outages and scheduled downtimes of power plants, the power firm executive stated that other compounding factor was the gas restriction experienced by the Malampaya field on the latter part of August, which then prompted gas plants to shift to more expensive liquid fuels.

The timeframe of the gas output limitation had fallen on the last supply month, and with the lag time, this will then be reflected in October billings.

“The supply of natural gas from Malampaya was restricted from August 28 to September 6 and several large plants went on forced outage in the first week of September,” Zaldarriaga narrated.

Such incidents in the power system “led to WESM (Wholesale Electricity Spot Market) prices reaching the offer cap of P32 per kilowatt hour on September 5 and 7.” The cap is the highest price that offered power capacities in the spot market would be reached and be settled at.

Zaldarriaga further highlighted that “WESM prices for the rest of September supply month remained higher than in August.”

He similarly asserted that since Meralco’s rates would be coming from series of reductions in the past five months, it is notable that the overall electricity tariff will be coming from a lower base.

“In fact, the overall power rate decrease since the start of 2020 is already at more than P1.00 per kWh,” Zaldarriaga said, adding that if the final numbers would be sorted, “we still expect the October 2020 rate to be significantly lower than that of the previous year.”