Understand your business bill

The largest component of the bill: the cost of power generated and injected into the distribution grid by power suppliers, the Wholesale Electricity Spot Market (WESM) and net-metering customer exports. It is computed monthly based on ERC-approved guidelines (ERC Resolution No. 14, Series of 2022) and billed to all captive customers at a uniform rate.

• It is affected by WESM demand and supply, fuel prices, exchange rates, the supply mix and plant utilization, and ERC-approved adjustments.

On average, the largest supply, around 50%, comes from natural gas plants using both indigenous natural gas (Malampaya) and imported liquefied natural gas (LNG). Coal plants supply around 35%, less than 10% comes from renewable energy, and the rest is sourced from WESM.

• July 2026 average generation cost per kWh, based on the June 2026 supply month: natural gas ₱11.91, coal ₱5.51, renewable energy ₱6.05 and WESM ₱9.68.
• Having the largest power requirement, Meralco is the only distribution utility capable of contracting directly with large-capacity natural gas plants.
• Meralco's supply procurement adheres to the Department of Energy's coal moratorium policy and its push for natural gas as a transition fuel.

The cost of using the transmission system, including the cost of delivering high-voltage power from generators to distribution utilities and the cost of ancillary services that support grid stability through frequency control, voltage regulation and the provision of backup power. It is computed monthly based on ERC guidelines and billed to all customers, with rates differentiated by customer class and voltage level.

• The transmission charge previously covered both NGCP's cost of power delivery and ancillary services. Starting August 2026, the Ancillary Service Charge is presented as a separate line item on the bill.

The unbundled portion of purchased power cost (generation and transmission) for energy lost in the distribution system. System loss is the difference between the energy input at the distribution utility's delivery point and the total energy output to customers, and it is inherent in providing electricity service.

• Technical loss: energy dissipated as heat and core loss through equipment, an innate and unavoidable part of electricity service.
• Non-technical loss: mostly caused by pilferage or theft, with the remainder due to defective meters, meter inaccuracies and erroneous meter readings.
• The ERC sets the system loss cap, the allowable level of system loss that distribution utilities may recover. Losses over the cap are borne by the distribution utility.
• It is computed monthly based on ERC guidelines and billed to all customers, with rates differentiated by voltage level.

All taxes are remitted to the local or national government in accordance with the law.

• Real Property Tax (RPT): ₱0.0065 per kWh in July 2026, under the Local Government Code, remitted to local government units.
• Local Franchise Tax (LFT): 0% to 0.825% depending on the LGU, under the Local Government Code, remitted to local government units.
• Value Added Tax (VAT): under Republic Act No. 9337, as amended, remitted to the national government.
• Energy tax: under Batas Pambansa Blg. 36, imposed to conserve energy and promote its efficient use; it applies only to residential customers consuming over 650 kWh and is remitted to the national government.

Billed to all customers to fund government-initiated renewable energy programs that promote cleaner sources of energy, such as solar, wind and hydropower, consistent with the Renewable Energy Act (Republic Act No. 9513).

• Feed-in Tariff Allowance (FIT-All): ₱0.2011 per kWh until July 2026 and ₱0.3359 per kWh starting August 2026. It is the difference between the feed-in tariff rates set by the ERC under the Feed-in Tariff program and prevailing WESM prices.
• Green Energy Auction Allowance (GEA-All): ₱0.0371 per kWh, currently suspended until the ERC directs otherwise. It is the difference between the rates set by competitive bidding under the Green Energy Auction program and prevailing WESM prices.

Billed to all customers as mandated by the government under EPIRA and remitted to the Power Sector Assets and Liabilities Management (PSALM), the designated fund administrator.

• Missionary electrification, for providing power to off-grid or remote areas such as isolated islands: NPC-Small Power Utilities Group (NPC-SPUG) at ₱0.2662 per kWh, by the government, and the Renewable Energy Developer Cash Incentive (REDCI) at ₱0.0101 per kWh, an incentive for private renewable energy developers.
• Environmental Fund: ₱0.0025 per kWh, for watershed rehabilitation and management.
• NPC Stranded Debts: ₱0.0428 per kWh, due to loans of the National Power Corporation (NPC) for building power plants before EPIRA was passed.

Mandated by EPIRA, extended by Republic Act No. 10150 and further extended and enhanced by Republic Act No. 11552, for qualified marginalized end-users who are part of the Pantawid Pamilyang Pilipino Program (4Ps) or are certified by the local Social Welfare and Development Office of their LGU.

• Lifeline discount, applied to the total electricity bill: 100% for 0 to 50 kWh (all distribution utilities), 35% for 51 to 70 kWh and 20% for 71 to 100 kWh (Meralco), based on DOE, DSWD and ERC Joint Resolution 1, Series of 2022, Resolution 1, Series of 2026, and ERC Resolution 2, Series of 2026.
• Uniform national lifeline subsidy: ₱0.01 per kWh paid by non-lifeline customers of all distribution utilities and remitted to PSALM, the designated fund administrator.

Mandated by the Expanded Senior Citizens Act (Republic Act No. 9994).

• Households: a 5% discount on the electricity bill for residential senior citizen customers consuming 100 kWh or less per month, on an account enrolled in the senior citizen's name.
• Institutions: a 50% discount on the electricity bill for senior citizen centers and residential care institutions accredited by DSWD.
• The senior citizen subsidy is billed to non-senior citizen and non-lifeline customers.
• The discounts apply to the generation, transmission, system loss, distribution, supply and metering charges, based on ERC Resolution 23, Series of 2010.

Meralco acts as a collecting agent of pass-through charges. Differences between the amounts paid to generation companies, NGCP and LGUs and the amounts billed to customers are unavoidable due to timing and billing adjustments. The ERC's confirmation process, for all 140 distribution utilities, evaluates whether there is an over-recovery for refund (payment lower than billing) or an under-recovery for collection (payment higher than billing).

• For 2011 to 2022, an ERC decision dated July 31, 2026 confirmed a ₱8.7 billion net under-recovery. Effectively, Meralco had already paid these amounts in advance to suppliers.
• In the case of generation, the ₱7.3 billion collection resulted from payments to generation companies exceeding billings to customers.
• The adjustments are implemented starting with August 2026 billing. The lifeline subsidy, RPT and LFT adjustments are presented as separate line items on the bill, while recovery of the remaining charges is embedded in the monthly rates.

Each line shows the amount to be recovered or refunded, the average rate per kWh and the estimated number of months.

• Generation: recovery of ₱7,299.12 million, ₱0.0701 per kWh over 36 months
• Transmission: recovery of ₱615.93 million, ₱0.0039 per kWh over 36 months
• System loss: recovery of ₱595.05 million, ₱0.0038 per kWh over 36 months
• Lifeline subsidy: refund of ₱0.55 million, ₱0.0001 per kWh over 1 month
• Senior citizen subsidy: refund of ₱2.25 million, ₱0.0005 per kWh over 1 month
• Real Property Tax: recovery of ₱228.88 million, ₱0.0015 per kWh over 36 months
• Local Franchise Tax: refund of ₱27.34 million, ₱0.0002 per kWh over 36 months
• Net under-recovery: ₱8,708.84 million, ₱0.0785 per kWh

Private distribution utilities account for differences between the Maximum Average Price (MAP) and the Actual Weighted Average Tariff (AWAT) and file with the ERC for a true-up.

• For calendar year 2025, the MAP was ₱1.35 per kWh and the AWAT ₱1.52 per kWh: a difference of ₱0.17 per kWh for true-up, equivalent to a ₱9.5 billion refund, including interest.
• The AWAT is influenced by the sales mix, as distribution rates vary by customer class. An increase in the sales share of residential customers, who have higher distribution rates, increases the AWAT, while a higher share of commercial and industrial customers tends to lower it.
• In Meralco's calendar year 2025 sales mix, the residential share increased from 30% to 36%, while the commercial share fell from 39% to 37% and the industrial share from 31% to 27%, compared with the 2010 sales mix used in the last rate-setting.

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