Joe Zaldarriaga
Electricity rates in June inched higher after a brief reprieve last month, but the increase was largely driven by higher power generation costs and broader market conditions rather than charges imposed by Manila Electric Company (Meralco).
Meralco announced a P0.1488 per kilowatt-hour (kWh) increase in the overall electricity rate for June, bringing the rate for a typical household to P14.4833 per kWh from P14.3345 per kWh in May. For residential customers consuming 200 kWh monthly, this translates to an additional P30 in their electricity bill.
The primary driver behind the adjustment was a higher generation charge, which rose by P0.2762 per kWh to P9.0704 per kWh. Generation charges account for the largest portion of consumers’ electricity bills and are determined by power suppliers and market conditions rather than Meralco.
Tight Supply, Costlier Fuel Push Generation Costs Higher
According to Meralco, electricity prices in the Wholesale Electricity Spot Market (WESM) climbed significantly amid tighter supply conditions in the Luzon grid during May.
The grid was placed under Red Alert for three consecutive days from May 13 to 15 after electricity demand surpassed previous records while several generation facilities and transmission lines experienced operational constraints. These conditions pushed spot market prices upward as available supply struggled to keep pace with demand.
Adding to the pressure were elevated global prices for coal and liquefied natural gas (LNG), as well as the continued depreciation of the peso, which increased the cost of imported fuel used by power generators.
Charges from Meralco’s power supply agreements also rose modestly, reflecting higher fuel costs and foreign exchange movements. More than half of these costs are denominated in foreign currencies, making them sensitive to peso fluctuations.
Meralco Shielded Customers From Larger Increases
Despite the higher generation costs, Meralco said customers were protected from a potentially larger increase through arrangements under regulator-approved power supply agreements.
The company noted that a substantial portion of line rental charges associated with electricity transmission were absorbed by its suppliers rather than passed on directly to consumers.
Meanwhile, charges from the Sta. Rita and San Lorenzo natural gas plants declined due to improved plant dispatch, helping offset part of the increase caused by higher fuel prices.
Lower Transmission Charges Help Ease Impact
Tempering the overall increase was a reduction in transmission charges, which fell by P0.1525 per kWh.
Residential customers also continue to benefit from an ongoing refund equivalent to P0.4278 per kWh, further helping cushion the impact of rising generation costs.
Meralco emphasized that pass-through charges for power generation and transmission are collected on behalf of power producers and the grid operator and do not form part of the company’s earnings. Taxes, universal charges, and feed-in tariff allowances are likewise remitted to the government.
Notably, Meralco’s distribution charge—the portion of the bill that the utility directly earns from—has remained unchanged since August 2022, when it implemented a P0.0360 per kWh reduction for residential customers.
Heat-Driven Consumption Could Have Bigger Impact Than Rates
Apart from the rate adjustment, Meralco cautioned that many households may see higher electricity bills this month because of increased power consumption during the extreme heat experienced in May.
“While there is an increase in electricity rates this month, elevated consumption patterns observed in May is also a major factor that could drive higher power bills of customers,” said Meralco Vice President and Head of Corporate Communications Joe R. Zaldarriaga.
The company encouraged consumers to monitor their electricity usage through their monthly bills, the My Meralco app, and the Meralco Appliance Calculator, which estimates the power consumption of common household appliances.
Meralco also reiterated the importance of energy-saving habits such as regularly cleaning air-conditioner filters, avoiding overfilled refrigerators, using LED lighting, and managing appliance use more efficiently.
As part of its consumer protection campaign, the utility reminded customers not to post copies of their electricity bills on social media to avoid exposing personal information that could be exploited by cybercriminals.
While electricity rates moved higher in June, the increase was primarily driven by external factors—namely higher generation costs, elevated fuel prices, peso depreciation, and tighter power supply conditions in the Luzon grid. Meralco’s own distribution charge remains unchanged, and lower transmission charges and ongoing customer refunds helped soften what could have been a much larger increase.