Owing primarily to the ancillary services as component of the transmission charge, the overall tariff of power utility giant Manila Electric Company (Meralco) had climbed by P0.1543 per kilowatt hour (kWh) in this September billing to P11.7882 per kWh versus P11.6339 per kWh last month.

The tariff increase, according to Meralco, will result in overall adjustment of P31 in the electric bills of residential subscribers in the 200-kWh usage bracket; and P46 for those with 300 kWh consumption.

The utility firm qualified that there was P0.2913 per kWh uptrend in the transmission rate because of the accrued charges which were not immediately passed on when the reserve market was suspended since March and was only instructed to resume operations on August 5 this year.

“Total ancillary service charges from the reserve market were double the charges from the National Grid Corporation of the Philippines’ (NGCP) ancillary service procurement ggreements (ASPAs),” the power firm noted, referencing on the procurement of reserves needed in the reliable operations of the country’s power system.

Meralco expounded that because of the escalation in transmission costs, the P0.1547 per kWh reduction in the generation charge had been offset; hence, the all-inclusive impact would be hike in the bills to be dispatched this month.

For taxes and other charges, the utility firm emphasized that these cost components were also on upswing by P0.0177 per kWh; thus, contributing to the upward pressure in the rates within this billing cycle.

On its supply purchases, Meralco reported that the lower generation charge was “primarily driven by the peso’s appreciation to its strongest level since December 2023,” and that essentially affected roughly half of costs on its power supply agreements (PSAs); then 97% of its dollar-denominated contracts with independent power producers (IPPs).

The power firm thus specified that its lower cost supply procurements resulted in P0.2371 per kWh reduction in its PSA charges; and P0.0529 per kWh for IPP-contracted capacities.

Additionally, the company’s supply sourcing from the Wholesale Electricity Spot Market (WESM) had declined by P0.0514 per kWh; despite factoring in the last installment of the deferred charges previously ordered by the Energy Regulatory Commission.

Meralco conveyed that bulk of its supply procurements last month at 46.2% had been from PSAs; while IPPs had 26.4 share in the pie; and a significant balance of 27.3% accounted for its exposure in the spot market.

This early, Meralco is already advancing words to its customers that the upward adjustment in prices may be sustained by next month because of the pass-on of roughly P0.30 per kWh from the deferred charges for the gas fuel used by First Gen on generating the capacity it has been delivering to the distribution firm.

As recently ruled by the ERC, the new gas sale and purchase agreements on the Malampaya pricing of the First Gen contract will have to be passed on already starting in the October billing; and the overall effect will be increase in tariffs.