The 7.8 million customers of Manila Electric Company (Meralco) will need to cough up higher budget in their electric bills this month, as the company’s overall pass-on tariff went up by P0.2347 per kilowatt hour (kWh) to P12.0545 per kWh from P11.8198 per kWh in the October billing cycle.

For residential end-users with typical consumption of 200-kWh, the scale of increase they will experience in the bills will be P47; while those in the 300-kWh usage band will brace for a rate hike of P70.41.

According to Meralco, a major line item which triggered the rise in its tariff had been the higher ancillary service charges of system operator National Grid Corporation of the Philippines (NGCP), with it climbing by P0.1211 per kWh.

“Driving this month’s overall rate increase is the uptick in the transmission charge, which went up by P0.1211 per kWh for residential customers due to higher ancillary service charges,” Meralco reiterated.

The utility firm noted that NGCP’s charges for ancillary services on regulating reserves spiked by roughly fourfold, “from P23.17 per kilowatt (kW) to P91.35 per kW,” with Meralco qualifying that such type of reserve requirement of the system “accounted for around 76.5% of total ancillary service charges.”

It was in the last supply month that the Energy Regulatory Commission (ERC) had given go-signal on the procurement of additional 257.78 megawatts of regulating reserve for NGCP, as prescribed under the  new ancillary service procurement agreements.

For the generation charge line item, Meralco reported that this climbed by P0.0671 per kWh to P7.1938 per kWh in the current billing cycle from P7.1267 per kWh last month; and that was mainly traced to higher charges billed by the independent power producers (IPPs) and the operator of the Wholesale Electricity Spot Market.

Other charges integrated in the current bill, including taxes and subsidies, also escalated by P0.0465 per; while the collection of the feed-in-tariff allowance (FIT-All) remains suspended in this billing cycle.

“WESM charges increased by P1.0933 per kWh due to tight supply conditions in the Luzon grid,” Meralco emphasized, adding that outages in plants’ capacity hovered at 956MW.

Given the scale of unavailable capacity into the system, Meralco indicated the “persistent high spot market prices triggered the imposition of the secondary price cap 7.22% of the time.”

On its capacity purchases from contracted IPPs, the rate hike had been at P0.1093 per kWh “mainly due to lower IPP dispatch and an increase in price of Malampaya natural gas following its quarterly repricing.”

Conversely, sourcing from power supply agreements (PSAs) had been lower by P0.2980 per kWh; hence, that  “mitigated the increase in the generation charge.”

The power firm qualified that “lower international coal prices, higher PSA dispatch, and higher excess energy deliveries, which are price-discounted, contributed to lower the PSA rate.”

Bulk of the capacities procured by Meralco last month had been from its PSA with 53.2% share; followed by contracted IPPs with 32.5% fraction in the pie; while spot market sourcing accounted for 14.3%.