By Euan Paulo C. Añonuevo Reporter

Electricity rates of Manila Electric Co. (Meralco) will go up this month by P0.25 per kilowatt-hour because of an increase in the cost of power from its suppliers.

For November, Meralco’s pass-through generation charge, the component of consumers’ electricity bills that reflects its power purchases, rose by about P0.33 per kilowatt-hour.

Ivanna de la Peña, Meralco vice president and utility economics head, said that the increase was brought about by reduced consumption in the previous month, high fuel cost and a depreciation of the peso.

“The increase in generation charge was due to a number of factors including the lower dispatch of independent power producers [IPPs] following reduced consumption in the October supply month [September 26 to October 25, 2009] after the series of typhoons that hit Manila and other parts of Luzon caused massive power outages,” she added.

The Meralco official said the hike in the generation charge was compounded by prolonged power outages in some portions of the utility’s franchise area resulting from trouble with a transformer in the Dolores Sub-station of the National Grid Corp. of the Philippines (NGCP), the country’s power grid operator.

Higher cost of power sourced from state-owned National Power Corp. (Napocor) and the Wholesale Electricity Spot Market (WESM) also contributed to the overall increase in the generation charge.

The country’s largest distribution utility with a customer base of over 4.63 million, Meralco sources the electricity it supplies from its privately contracted independent producers, Napocor and the spot market.

Hike tempered by ERC

The increase in its generation charge, however, will be tempered by rate cuts ordered recently by the Energy Regulatory Commission (ERC), the power sector’s regulator. The cuts amount to about P0.08 per kilowatt-hour.

The commission ordered Meralco to decrease its transmission charges, a portion of power bills that takes into account payments made to the National Grid Corp., by P0.06 per kilowatt-hour and refund adjustments to its previous power purchases by P0.02 per kilowatt-hour.

“Given these mitigating factors, customers will see a net increase of about P0.25 per kilowatt-hour,” de la Peña said.

The increase would result roughly in a P25 increase in electricity bills of Meralco customers consuming 100 kilowatt hours of electricity and P50 for those consuming 200 kilowatt hours.

De la Peña said, however, that even with the increase, the generation charge of P4.23 per kilowatt-hour this month is still lower than levels prevailing in the first semester of 2009 that peaked at P5.02 per kilowatt-hour in April.

“In fact, the rate this month is still lower than the P4.26 per kilowatt-hour generation charge in June and July 2009,” she added.