More than 7.0 million customers of Manila Electric Company (Meralco) will experience squeeze in their household budgets as the electricity tariff of the power utility will rise by P0.5006 per kilowatt hour (kWh) in its September billing cycle.

The rate hike will drive up Meralco’s overall residential tariff to P11.3997 per kWh this month compared to P10.8991 per kWh in the August billing.

For residential end-users in the 200-kWh threshold of consumption, the aggregate increase in their electric bills will be P100 in their forthcoming payments, according to Meralco.

The power firm explained that the rate escalation had been mainly triggered by the uptick in generation charge – a component which accounts for the biggest pie of the pass-on tariff; and collections will be correspondingly paid to its power suppliers.

Meralco said its generation charge for September billing climbed by P0.4323 to P6.8252 per kWh versus last month’s P6.3929 per kWh; “due to higher costs from power supply agreements (PSAs) and independent power producers (IPPs).”

For costs accruing from its PSAs, it emphasized that the resulting upswing had been at significant P1.0362 per kWh; and that had been sparked off by “higher fuel prices and the peso’s depreciation against the US dollar, which affected around 30-percent of PSA charges that are dollar denominated.”

That was also the parallel fate of its contracted IPPs in this billing cycle, with the charges from this league of power suppliers increasing by P0.4776 per kWh.

“The weakening of the peso against the US dollar affected around 98-percent of IPP costs which are dollar-denominated, while Malampaya gas supply restrictions led to increased use of more expensive alternative fuel by First Gas plants,” Meralco expounded.

Essentially, the financial distress that consumers will have to wade through in this billing month would be a reverse of the aggregate P1.0121 per kWh rate reduction that they enjoyed in the last two months.

For supply sourcing from the Wholesale Electricity Spot Market (WESM), Meralco reported that there was a decline of P0.5034 per kWh, “mainly due to reductions in adjustments and other charges.” Nevertheless, that was not enough to offset the higher charges billed by the other suppliers.

The company’s exposure to the spot market in the last supply month was considerably significant at 23-percent; and that was mainly precipitated by the termination of supply deals from previously-contracted providers.

For transmission charges, there would very marginal drop of P0.0081 per kWh in the September billing because the pass-on by the National Grid Corporation of the Philippines (NGCP) of its 3.0-percent franchise tax had already been stopped by the Energy Regulatory Commission.

On the other line items, Meralco indicated that the universal charge had been on a downtrend of P0.0239 per kWh because of the completion of the one-year recovery period of the universal charge for missionary electrification (UCME) that is remitted to the government as subsidy to end-users in the off-grid areas.

Conversely, for taxes and other charges, there had been slight increase of P0.1003 per kWh; while the feed-in-tariff allowance (FIT-All) component of P0.0364 per kWh remains suspended on the order of the industry regulator.