Roughly 8.0 million customers of Manila Electric Company (Meralco) will live through financial torment when they receive their February bills, as the overall rate of the country’s biggest power utility will rise by P0.5738 per kWh.

On account of that, Meralco announced that the all-inclusive tariff it will reflect in its billing this month will climb to P11.9168 per kWh versus a leaner P11.3430 per kWh in the January billing cycle.

The uptrend in Meralco’s tariff will result in overall hike of P115 for those in the 200-kWh usage base; and P172 for end-users in the 300-kWh consumption bracket.

Meralco explained the tariff elevation was mainly traced to the climb of fuel prices in the world market – primarily liquefied natural (LNG), which is now augmenting the fuel needs of the country’s portfolio of gas plants.

It emphasized that the generation charge component in the bill jacked up by P0.4552 to P7.1020 per kWh from P6.6468 per kWh in the previous month, “primarily due to higher cost of power from independent power producers (IPPs) and power supply agreements (PSAs).”

The IPP supply procurements of Meralco primarily accounted for the capacity of the ‘legacy plants’ that were underpinned with long term contracts when they served as a long-term solution to the worst Philippine power crisis in the 1990s; while PSAs were mainly signed after the restructuring of the power industry -- including those which had gone through competitive selection process or bidding.

Beyond uptick in the prices of imported liquefied natural gas (LNG), Meralco similarly noted that the price of indigenous Malampaya gas had gone up in the last supply month.

“The Malampaya gas price to Sta. Rita went up by almost 12%, following the signing of a new gas supply and purchase agreement (GSPA) between First Gas and the Malampaya consortium,” the utility firm stressed.

Additionally, Meralco conveyed that “the price of Malampaya gas to San Lorenzo - which is still priced based on the old GSPA - rose by less than 2%..”

Beyond escalation in the generation charge, Meralco indicated that the resumption of collection of the P0.0364 per kWh feed-in-tariff allowance (FIT-All) as subsidy to  qualified renewable energy (RE) projects also added pressure to this month’s electricity rates.

Another triggering factor to the rate escalation had been the depreciation of the Philippine peso's value against the greenback, given that 96% of the IPP costs are dollar-denominated.

Further, the transmission charge in the bill - which accounts for the pass-through ancillary services charge of system operator National Grid Corporation of the Philippines (NGCP), along with other charges, had posted aggregate increase of P0.1186 per kWh

Meralco further reported that the average price of its PSAs climbed by P0.1558 per kWh “due to higher charges from emergency PSAs and peso depreciation,” specifying that these developments “affected around 11% of PSA costs that were dollar-denominated.”

The line item in the bill which provided a counterweight to the rise in fuel prices had been the relatively tame prices in the Wholesale Electricity Spot Market (WESM), which registered an overall decline of P0.4071 per kWh for February billing.

Meralco’s exposure in the spot market last month hovered at 20.4%; while the bulk of its supply portfolio had been sourced from PSAs with a share of 46.8%; while the balance of 32.8% had been procured from the contracted IPPs.