The Energy Regulatory Commission (ERC) continues to observe the charges made by generation companies (GenCos) collected from consumers by distribution utilities (DU).

The ERC said that this year's generation rates showed stability, but noticed an imbalance between the global coal price reduction and the decline in the country’s generation rates.

The generation charge is the price of producing the consumer’s power supply excluding transmission fees, system loss, distribution fees, subsidies, and taxes.

This is also collected by the DUs and is submitted to the GenCos or the electricity providers which make up for the 60 percent to 65 percent monthly electricity bill of consumers.

According to the ERC’s analysis, there has been a decrease in global coal prices from December 2022 until November 2023.

This was based on the Newcastle Coal Price Index, which is the most common index used by the Asia-Pacific region that measures thermal coal prices.

Although most GenCos are getting coal from Indonesia at the same price level, there is still a large inconsistency.

The ERC also mentioned that the rates were sustained after the Russia-Ukraine crisis.

However, the sharp descent in coal prices has not reflected the trend of generation costs in the country. 

“While there is a convergence in the upward movement when coal prices are rising, we noted that there is a divergence at the time the fuel prices are declining,” said ERC.

The commission was also able to monitor coal prices because of the large amount of coal-fired power plants in the country’s energy landscape.

The ERC said that coal supply imports make up more than 80 percent.

Last year, coal had at least 44 percent of 12,428 megawatts (MW) of the generation’s installed capacity, which held the largest amount by plant type.

The second largest amount went to renewable energy with 8264 MW or 29.2 percent of the capacity.

Oil-based energy followed at 13.6 percent or 3834 MW.

Natural gas stood at 3732 MW or 13.2 percent.

The Energy Commission said that coal continues to lead in the gross power generation at 59.6 percent of its contribution to the country’s power mix.

“The past 24 months have seen record increases in fuel prices,” ERC reported. 

Affecting electricity rates when fuel costs were allowed to be passed directly to customers, the commission stated, “The price of natural gas and oil increased to a substantial extent, while the prices of coal climbed to almost 150 percent immediately after the first quarter of the year 2022.”

In November, the generation rates gradually increased to 6 percent compared to the previous month’s billing.

Finally, the ERC said it will release its findings on the initial fuel cost audit for generation firms by early next year.

“The audit involves an analysis of the approved fuel formula of GenCos vis-à-vis the amount collected from distribution utilities that are being passed on to consumers,” they explained.

The reviews conducted are part of ERC’s mission to protect Filipino consumers by promoting a fair market in the energy sector and providing disciplinary measures to those who abuse the market power.