MANILA, Philippines – Meralco customers will face higher electricity bills this October, as the energy giant announced a 32-centavo hike per kilowatt-hour (kWh).

The Manila Electric Company (Meralco) said on Tuesday, October 13, that its overall residential electricity rate will rise by P0.3191 per kWh, bringing it to P15.0615 from P14.7424 in September.

For a household consuming 200 kWh monthly, this translates to an additional P64 on the electricity bill, bringing the total to around P3,012.

Most of the increase was because of higher generation costs, which rose by P0.4973 per kWh amid elevated fuel prices, a weaker peso, and tighter electricity supply.

Meralco said electricity purchased from First Gas and Prime CoreGen became more expensive as the plants used liquefied natural gas (LNG), whose price remains elevated due to the ongoing conflict in the Middle East.

Meanwhile, electricity purchased from the Wholesale Electricity Spot Market (WESM) also became more expensive due to tighter supply conditions in Luzon.

These increases were only partly offset by cheaper electricity from other contracted suppliers, lower transmission charges, and reduced taxes.

The removal of the 12% value-added tax on allowable system loss charges also helped reduce the overall increase.

Higher distribution rates, and refunds coming in November

The October rate does not yet include the newly approved increase in Meralco’s own distribution charges, which the Energy Regulatory Commission (ERC) approved following the distribution utility’s first rate review in 15 years.

Unlike generation and transmission charges, which are pass-through fees, distribution charges pay for Meralco’s own operations and allow it to earn a regulated profit.

The ERC approved an average distribution rate of P1.48 per kWh, up from the existing P1.35, although Meralco has yet to determine the exact impact on residential customers.

Meralco spokesperson Joe Zaldarriaga said the company expects to implement the higher distribution rate beginning November billing, which will be slightly offset by a newly approved P2.64-billion refund to customers.

The refund, equivalent to P0.1733 per kWh for residential customers, will run for six months or until the full amount is returned. It could offset much of the impact of the distribution rate increase, with Zaldarriaga saying the two adjustments could result in a slight net reduction in charges.

Meralco is also continuing two previously approved refunds totaling P1.0139 per kWh for residential customers.

Asked by Rappler whether Meralco’s planned investments to reduce system losses were considered in the rate reset, Meralco head of utility economics Larry Fernandez confirmed that the company had included spending proposals to bring down these losses. (READ: MAP: Where have system losses been highest from 2021 to 2025?)

However, Fernandez said Meralco could not yet identify which projects regulators had approved, reduced, or rejected. As such, the company also did not provide specific targets or timelines for reducing technical and non-technical system losses. – Rappler.com