Consumers may have noticed higher electricity bills in recent months, but Meralco clarified that the latest increase in power rates is largely being driven by factors beyond its control, including global fuel price volatility, the weakening peso, and government policies aimed at ensuring energy security during the country’s transition to cleaner power sources.
According to Meralco, the recent increases stem primarily from generation charges—the portion of the electricity bill that reflects the actual cost of producing electricity. These costs have been affected by soaring international fuel prices amid ongoing geopolitical tensions in the Middle East and the depreciation of the Philippine peso against the US dollar.
Meralco Senior Vice President and Head of Regulatory Management Atty. Jose Ronald V. Valles explained that the utility merely passes through these generation costs to consumers and does not profit from them.
“The recent electricity price increases pertain to generation charges which reflect the spike in international fuel prices and peso depreciation as a result of the ongoing conflict in the Middle East, and the government’s policy to use natural gas as energy transition fuel and the suspension of new coal-based power plants,” Valles said.
He noted that natural gas, which is widely regarded as a transition fuel toward a cleaner energy mix, is generally more expensive than coal even under normal market conditions. The current geopolitical situation has further driven up fuel costs globally.
Meralco currently sources around 50% to 60% of its electricity requirements from natural gas-fired power plants, a move that has been deemed critical to maintaining grid reliability in Luzon. The Department of Energy (DOE) has directed the company to continue sourcing power from First Gas Sta. Rita to help ensure sufficient electricity supply across the grid.
Without these supply arrangements, Meralco warned that Luzon could face power shortages and prolonged outages.
“MERALCO is the only distribution utility sourcing from natural gas-fired power plants to ensure grid security, which is the reason why its generation costs may, at times, appear higher than those of other distribution utilities that are largely dependent on coal and other cheaper renewable energy sources,” Valles said.
Despite the higher costs associated with natural gas, Meralco stressed that its procurement process is heavily regulated by the government. Under existing rules set by the DOE and the Energy Regulatory Commission (ERC), distribution utilities are required to conduct competitive public bidding for their power supply agreements to ensure consumers get the least-cost electricity available.
Power supply contracts entered into by Meralco with suppliers such as Excellent Energy Inc. and South Premiere Power Corp. underwent the required Competitive Selection Process and were subsequently reviewed and approved by the ERC.
“The ERC determines whether such contract complies with the distribution utility’s mandate under the Electric Power Industry Reform Act (EPIRA) to provide its customers with the least-cost supply,” Valles said. “All the power supply agreements of Meralco were approved by the ERC, a testament to its compliance with the Least Cost mandate under EPIRA.”
He added that ERC oversight does not end after contract approval. During implementation, the regulator conducts confirmation proceedings to verify that only proper and allowable generation costs are passed on to consumers.
Meralco also emphasized that electricity bills are influenced not only by electricity rates but also by consumption levels. Higher usage, particularly during the summer months when cooling appliances are used more frequently, can result in bigger monthly bills even if rates remain unchanged or decline.
Meanwhile, the company pointed out that its own distribution-related charges—the portion of the bill that goes directly to Meralco—have actually declined over the years.
“Our rates have actually gone down by 18% since 2014 unlike all other private distribution utilities. Customers are paying less today for the distribution-related charges that go to MERALCO compared to more than a decade ago,” Valles said.
He noted that this reduction comes despite significant increases in the prices of basic goods and services over the same period. Consumer prices for food and transportation in Metro Manila have risen annually by an average of 4.1% and 2.7%, respectively, while daily minimum wage rates for non-agricultural workers have increased by about 5.7% annually.
As the country continues its energy transition and navigates global market uncertainties, Meralco maintained that it remains committed to ensuring a stable power supply while complying with strict government regulations designed to protect consumers and promote least-cost electricity procurement.