With the repricing of fuel supply from the Malampaya gas field, power utility giant Manila Electric Company (Meralco) is expecting upward adjustment in the electric bills to their customers in this August billing cycle.
According to Meralco, while all billings from its power suppliers are still not in, the initial calculation indicates probable increase in its pass-on tariff.
The utility firm qualified though that if cost-offsetting elements will be factored in, including the cessation of some pass-on adjustments, there is still a possibility that the rate hike could be tamed or even a rate reduction may still happen.
“While we have yet to receive final billings from our suppliers, there may be an upward adjustment in the generation charge this month,” the power firm stressed.
Meralco Vice President Lawrence S. Fernandez sounded off that “we expect the quarterly repricing of the Malampaya natural gas in July, where more than 30-percent of our supply comes from, to weigh on the August bills.”
The power plants of which capacities had been contracted to Meralco include those of the First Gen generating assets, as well as the Ilijan gas-fired power facility that had been recently turned over to South Premiere Power Corporation (SPPC) of the Miguel group.
The First Gen power facilities, in particular, have been continuously leaning significantly on gas supply from the Malampaya field; while the Ilijan plant’s contract already expired in June.
The Meralco executive noted though “there’s a chance that higher Malampaya price will be offset by the completion of the P0.13 per kilowatt hour amortization,” or the pass-on of deferred charges on power generation costs -- primarily during the summer months of May, June and July that would be subsequently stopped in the August billing.
Fernandez expounded that “the recent repricing reflects the impact of the international oil prices in the past six months or from January to June -- when Dubai crude averaged at around $102 per barrel, an 18-percent increase from the September 2021 to March 2022 average price.”
The power utility firm is raising hopes that “the improved Luzon grid situation - which had a red alert and series of yellow alerts in the June supply month -- will lead to lower WESM (Wholesale Electricity Spot Market) prices and mitigate the impact of higher fuel prices and peso depreciation.”
The generation charge, which accounts for more than 50 percent of the cost components being reflected in the bills, is a pass-through cost. Hence, Meralco is just collecting such charges and will in turn remit them to its power supplier-generators.