An increase of P0.0846 per kilowatt hour (kWh) in the January billing cycle of Manila Electric Company (Meralco) will bring slight squeeze in the pockets of its roughly 8.0 million customers in the initial month of this year.

The power utility firm announced that its tariff will climb to P11.3430 per kWh this month versus a leaner P11.2584 per kWh in December.

For residential end-users within the average 200-kilowatt hour consumption bracket, the overall increase in their bills will be roughly P17; and more than P25 to those with 300 kWh usage.

Meralco qualified that the rate hike was generally triggered by higher generation charges, as that component in the rates escalated by P0.1136 per kWh in the last supply month to P6.6468 per kWh from P6.5332 per kWh in the previous billing.

On the other cost items in the bill, the power company indicated that transmission and other charges posted a net reduction of P0.0290 per kWh; while the feed-in-tariff allowance (FIT-All) component had remained suspended.

Meralco expounded that the higher generation costs had been mainly precipitated by elevated prices at the Wholesale Electricity Spot Market (WESM); as well as from higher cost of capacity sourced from the independent power producers (IPPs).

In particular, spot market prices had gone up by P0.5611 per kWh “due to higher average capacity on outage in the Luzon grid, “ Meralco said, adding that the scale of capacity taken out from the system hovered at 418 MW.

Meralco similarly noted that charges from its contracted IPPs inched up by P0.1384 per kWh; and that had been traced to the higher costs of fuel used by First Gas in its Santa Rita and San Lorenzo gas plants – primarily owing to “the use of imported liquefied natural gas (LNG) in the testing and commissioning of its LNG terminal.”

The cost uptrend for its supply procurements from the WESM and contracted IPPs had been tempered so far by the P0.1522 per kWh reduction in charges of power supply agreements – primarily on capacity drawn from the Therma Luzon Inc. generating facility of the Aboitiz group; as well as the South Premiere Power Corp. plant of the San Miguel group – with Meralco qualifying that these capacities had been delivered at a discount.

On supply sourcing last month, Meralco had taken the bulk from its PSAs with a share of 43%; and 36.5% had been procured from its IPPs; while there was also a relatively heavy exposure of 20.5% at the spot market.