Generation Charge goes up in February leading to rate increase

Jan-Feb 2017 average rate still at 2016 levels
MANILA, PHILIPPINES, 10TH February 2017 – Coming from a 7-year low overall rate of PhP8.09 per kilowatt hour (kWh) in January 2017, Meralco announced that there will be an increase in the rate for a typical household this February 2017 of PhP0.92 per kWh, thereby bringing the overall rate to PhP9.00 per kWh.

This would bring the running average overall residential rate for 2017 to PhP8.55 per kWh. This is PhP2.17 per kWh lower than the 2014 average rate of PhP10.72 per kWh, and PhP0.89 per kWh lower than the 2015 average rate of PhP9.44 per kWh. This also approximates the 2016 average of PhP8.50 per kWh.
The increase this month is mainly due to the upward movement in the generation charge.
Normalization of capacity charges and lower dispatch cause generation rate increase

January 2017’s record low generation charge (since October 2004) of PhP3.70 per kWh was largely due to a reduction in capacity fees arising from the annual reconciliation of outage allowances that is done at the end of each year, under the contracts approved by the Energy Regulatory Commission (ERC). The reduction in capacity fees every January represents savings immediately passed on to consumers by way of lower electricity rates.

The capacity fees, particularly of Pagbilao and Ilijan returned to normal levels this February, pushing up the generation charge by PhP0.62 per kWh higher to PhP4.32 per kWh.
Contributing to the adjustment was the lower dispatch of PSAs and IPPs due to a variety of scheduled and forced outages. Calaca, Masinloc, Quezon Power, and First Gas-Sta. Rita underwent scheduled shutdowns, while the Ilijan power plant was isolated by transmission line troubles due to Typhoon “Nina”.  Demand in January 2017 was also about 400 MW lower compared to the December 2016 level.

The remainder of the increase in the generation charge was due to higher fuel prices, partially from the quarterly repricing of Malampaya natural gas, and a slight depreciation of the Peso vis-à-vis the US dollar.  The share of PSAs this month stood at 38.6%, while the share of IPPs was at 38.1%.

Overall charges from the Wholesale Electricity Spot Market (WESM) decreased by PhP0.25 per kWh in January 2017, mitigating further increases in the generation charge. The share of WESM purchases to Meralco’s total requirements went up from 21.8% to 23.2%.
Adjustments in other bill components

This month, there was an increase in the transmission charge of residential customers by PhP0.15 per kWh due to the increase in Power Delivery Service Charges caused by NGCP’s implementation of higher Interim Maximum Allowable Revenue (iMAR). Higher Ancillary Service Charges also contributed to the increase in the transmission charge.

Taxes and other charges similarly went up by a combined amount of around PhP0.15 per kWh.

Meralco’s distribution, supply, and metering charges, meanwhile, have remained unchanged for 19 months, after these registered reductions in July 2015. Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the National Grid Corporation of the Philippines (NGCP).
Meralco provides energy efficiency tips for customers

In light of the higher rates this month, Meralco advised its customers to continue practicing energy efficiency initiatives to help manage their electricity consumption. These include everyday household tips that may help save energy.  Simple tips such as unplugging appliances when not in use to avoid “phantom load.” Using a power board or strip which can supply power to several appliances at once and allows a user to conveniently turn them off simultaneously using just one switch.  Maximizing natural light during daytime and keeping appliances well maintained to ensure optimal performance. For more helpful tips, customers may visit its website at or its social media accounts, twitter @meralco and facebook at