Meralco to implement P1.08 per kwh rate hike in 2 tranches

Arra B. Francia, BusinessWorld online edition

February 10, 2018

MANILA Electric Co. (Meralco) will implement its P1.08 per kilowatt-hour (kWh) rate hike for the February billing in two tranches.

In a statement on Friday, the country’s largest distribution utility said it will increase electricity rates by 75 centavos per kWh in this month’s billing. The remaining 30% or a 33-centavo increase will be included in the March billing.

Meralco said the power rate hike is being implemented in two tranches, “cognizant of the fact that there were recent price increases on fuel and other basic commodities.”

The overall February rate will now stand at P9.47 per kWh, compared to P8.72 per kWh in January.

With this, households consuming 200 kWh a month will see a P150 increase in their monthly bills. Households that consume 300 kWh, 400 kWh, and 500 kWh will see an increase of P225, P300, and P375, respectively in February.

Meralco attributed this month’s increase in generation charges to higher charges from plants under Power Supply Agreements (PSAs) and Independent Power Producers (IPPs). Meralco said the generation charge increased by P0.8469 to P4.6548 per kWh in February, from P4.0768 per kWh in the previous month. However, the February billing will only reflect a P0.5780 per kWh hike, with the balance implemented in the March bill.

“The return to normal levels of capacity fees, particularly Pagbilao and Ilijan, was the main reason for the P1.7067 per kWh increase in PSA charges, to be reflected this February,” the company said.

Meanwhile, charges from IPPs rose by P0.3430 centavos per kWh, which the company attributed to the peso depreciation as well as higher Malampaya natural gas prices due to quarterly repricing and lower average plant dispatch.

A total of 40.6% of Meralco’s energy requirements were sourced from PSAs, while 40.7% came from IPPs. The remaining 18.7% of Meralco’s power requirements came from the Wholesale Electricity Spot Market (WESMmonth, where charges decreased by P0.0041 per kWh on lower power demand in the Luzon grid.

Previously, Meralco reduced electricity rates in January and December due to lower charges from supply contracts and at the spot market.

Transmission charge of residential customers meanwhile fell by P0.0372 per kWh, which goes directly to the National Grid Corporation of the Philippines. Taxes and other charges, which are remitted to the government, rose by P0.2092 per kWh this month.

“Meralco’s distribution, supply, and metering charges have remained unchanged for 31 months, after these registered reductions in July 2015,” the company said.

Electricity contributes 4.51% to the theoretical basket of basic goods and services used by a typical Filipino household on which annual inflation is computed.

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MERALCO TOLD TO EXPLAIN RATE HIKE DUE TO TRAIN

MANILA, Philippines — Energy Secretary Alfonso Cusi has ordered Manila Electric Co. (Meralco) to explain how it came up with the  eight centavos per kilowatt-hour (kwh) increase in electricity bills as a result of the Tax Reform for Acceleration and Inclusion (TRAIN) law.

Cusi said he has written Meralco to explain the projected increase in electricity bills. He has also has directed Energy Undersecretary Jesus Posadas to scrutinize the impact of the TRAIN law as estimated by country’s largest distributor.

“They are saying the increase is eight centavos (for the tax in transmission and coal tax)…we are discussing that now and I told them to scrutinize it because I will not just accept it as a matter of fact,” he said. “It is my responsibility so that I can tell the public.”

Cusi said this is to protect the interests of consumers, particularly Meralco customers.

“That is the role of DOE, we set the policy, we make sure that everybody will follow the policy,” he said.

Earlier this week, Meralco said its customers can expect an increase of at least eight centavos per kwh in their electricity bills, taking into consideration the impact of TRAIN.

Meralco head of utility economics Lawrence Fernandez said electricity rates will be pushed up by implementation of the coal excise tax and the removal of the value added tax (VAT) exemption of the National Grid Corp of the Philippines (NGCP) under TRAIN.

Under Republic Act 9511, NGCP was exempted from paying income tax and VAT. This was repealed in Section 86 of the TRAIN Act, subjecting NGCP to the VAT provision under the National Internal Revenue Code (NIRC).

Based on Meralco’s computation, the VAT on transmission charge will translate to an additional seven-centavo per kwh in its rates which can take effect in February bills, Fernandez said.

For the impact of the coal excise tax, Meralco is awaiting the response of suppliers to compute the increase in electricity rates.

Under the TRAIN law, what was approved was a lower coal excise tax of P50 per metric ton in 2018, P100 in 2019, and P150 in 2020 compared with the original Senate proposal of a “100-200-300” hike scheme.

At P50 per metric ton, Fernandez said the excise tax of coal and oil will translate to an increase of around one centavo per kwh.

However, DOE Undersecretary Felix William Fuentebella said the impact of coal excise tax on electricity rates are expected to reflect on consumers’ electricity bills by March or April because coal plant generators maintain coal reserves good for at least 30 days.

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Reference:

Rivera, D. (January 13, 2018). Meralco told to explain rate hike due to TRAIN. The Philippine Star. 

CUSI ORDERS MERALCO TO EXPLAIN P0.08 PER KWH POWER RATE INCREASE

Energy Secretary Alfonso Cusi has asked Manila Electric Co. to explain its computation of a P0.08 per kilowatt-hour increase in electricity rates following the implementation of the Tax Reform for Acceleration and Inclusion, or TRAIN, tax package.

“… I asked Meralco how did it  arrive at P0.08 per kWh,” Cusi told reporters.

Cusi directed Energy Undersecretary Jesus Posadas to study the impact of the TRAIN on the power sector.

“That is the role of DoE, we set the policy, we make sure that everybody will follow the policy,” the energy chief said.

Meralco head of utility economics Lawrence Fernandez said early this week the company was waiting for the billing of National Grid Corp. of the Philippines to reflect the lifting of the value added tax exemption that would increase rates by P0.07 per kilowatt-hour.

Fernandez said the impact of the higher excise tax on coal was around P0.01 per kWh.

Cusi said the department was also studying the impact of the TRAIN on the Small Power Utilities Group, or the missionary areas of National Power Corp.

“These people are scrutinizing all of those to make sure that the consumers are protected,” he said.

Cusi said he had a responsibility to the public to ensure the rates passed on the utilities were accurate.

Fernandez said NGCP was previously exempted from the VAT on transmission wheeling charges until it was repealed by the TRAIN.

“For NGCP, the TRAIN is in effect January 1. We expect them to apply the VAT on transmission wheeling charges, Fernandez said, adding a 12 percent percent VAT would add P0.07 per kWh to the electric bills of consumers.

He said the earliest Meralco could pass on the TRAIN impact to consumers would be in the February billing.

“If NGCP incorporates it in their January billing, we should expect by February that it will be effective,” Fernandez said.

He said the impact of higher excise tax on coal on Meralco customer was estimated at P0.01 per kWh.

“For generators, it will depend on their stock of coal if they bought it new or in stock. Our expectations is they will stagger the implementation of the coal tax,” he said.

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Reference:

Flores, A. M. S. (January 12, 2018). Cusi orders Meralco to explain P0.08 per kWh power rate increase. Manila Standard.