Electricity consumers can expect to see higher transmission rates on their August bills, as the National Grid Corporation of the Philippines (NGCP) starts to recover long-standing infrastructure investments.

The NGCP reported on Wednesday, Aug. 13, that its transmission rates climbed by ₱0.1312 per kilowatt-hour (kWh), pushing the average transmission rate to ₱1.3233/kWh this month—a 9.25 percent increase for July.

Julius Datingaling, head of the NGCP's revenue management department, said the increase was driven by the newly approved Maximum Allowable Revenue (MAR) and the collection of under-recoveries (UR) by the ERC.

To recall, the ERC gave the NGCP the go-ahead last July to begin implementing its ₱28.29 billion staggered cost recovery with the August billing cycle, following the completion of the utility’s fourth regulatory reset.

The ERC schedule stipulates that the UR will be collected at a fixed rate of ₱0.0384/kWh over seven years. The MAR, meanwhile, will add ₱0.0629/kWh to rates and totals ₱58.10 billion.

The MAR is an ERC-set limit on how much money the NGCP is allowed to earn each year.

On the other hand, UR occurs when the NGCP’s actual earnings fall below this limit. The government may then permit the transmission firm to recover the missed revenue from consumers by adding a small fee to their electricity bills.

NGCP Spokesperson Cynthia Alabanza clarified that the ₱28.29 billion recovery accounts for project costs incurred more than a decade ago that were not previously billed due to a lack of ERC proceedings.

“These were already used for projects...so these were already spent but were not included in the previous billings, because there weren’t any ERC proceedings during the period,” Alabanza explained.

These approvals coincide with the green light for the NGCP's fourth regulatory period (4RP) reset, which spans from 2016 to 2022. The previous 3RP, covering 2010 to 2015, took over 10 years to complete its reset process. Alabanza, however, expressed hope that the ERC would expedite the 5RP process, which is expected to begin by 2028, to stay on schedule for the sixth regulatory period.

Despite the rate increases, ancillary services (AS)—costs associated with grid stability—posted a slight decrease to ₱0.5872/kWh in June, from ₱0.6182/kWh in May. The NGCP is also considering reapplying for a ₱500 billion revenue recovery.

The rate hikes from NGCP are not the only increase consumers will see on their bills, as power distributor Manila Electric Co. (Meralco) also declared an overall electricity rate increase for August billing.

On Tuesday, Aug. 12, Meralco announced an overall electricity rate increase of ₱0.6268/kWh for a typical household, bringing the new rate to ₱13.2703/kWh from ₱12.6435/kWh last month.

Joe R. Zaldarriaga, Meralco vice president and head of corporate communications, stated this translates to an approximate ₱125 increase for residential customers who consume 200 kWh.

Zaldarriaga cited higher pass-through charges and a depreciated local currency as the primary drivers. The generation charge rose by ₱0.3749/kWh, largely due to increases from Independent Power Producers (IPPs) and the Wholesale Electricity Spot Market (WESM).

IPP charges surged by ₱0.9476/kWh, with Meralco attributing this to a nearly ₱2 depreciation of the local currency against the U.S. dollar, which impacts 99 percent of dollar-denominated IPP costs. Lower average plant dispatch due to maintenance at the First Gas-Sta. Rita and First Gas-San Lorenzo power plants also contributed.

WESM charges also increased by ₱0.4582/kWh due to a nearly 400 MW increase in average capacity outages in the Luzon grid. However, these increases were partially offset by a ₱0.2604/kWh reduction in charges from Power Supply Agreements (PSAs) due to lower coal and liquefied natural gas prices and improved PSA dispatch.

Meralco’s distribution charge has remained unchanged since August 2022.