CUSTOMERS of Manila Electric Co. (Meralco) may expect higher electricity rates this month as the power distributor anticipates increases in generation and transmission charges.

“We are still waiting for some billings, but indications point to possible increase in the generation and transmission charges,” Joe R. Zaldarriaga, vice-president and head of corporate communications at Meralco, said in a statement on Tuesday.

The projected higher generation charge was attributed to the increase in prices at the Wholesale Electricity Spot Market (WESM), the trading platform for electricity.

Power plants that went on outage accumulated an average lost capacity of almost 1,000 megawatts (MW), failing to meet the average demand, which jumped by over 1,000 MW, Mr. Zaldarriaga said, citing initial information.

Data from the Independent Electricity Market Operator of the Philippines showed that the average price of electricity at the WESM surged by 95.5% to P5.34 per kilowatt-hour (kWh) as demand rose while supply declined due to forced outages.

Available supply decreased by 4.4% to 19,611 MW, while demand grew by 5.9% to 13,670 MW.

For Luzon alone, the WESM rate climbed by 102.7% to P5.50 per kWh.

The Luzon grid was placed under yellow alert on March 5 due to thin power reserves.

Transmission charges are also expected to increase due to higher ancillary service charges driven by elevated prices at the reserve market.

Generation charges, which cover the cost of power purchased from suppliers, usually account for more than 50% of the monthly electricity bill. Transmission charges, meanwhile, refer to the cost of delivering power from suppliers to the distribution system and constitute around 3% of the bill.

A slight relief, however, is expected to cushion the possible increase, as Meralco will begin implementing the P19.95-billion refund to its customers, as approved by the Energy Regulatory Commission (ERC).

The refund, which must be implemented within three years, translates to an average rate of P0.1189 per kWh.

“We hope that the start of the implementation of the refund approved by ERC will help mitigate these possible increases in these bill components. This is equivalent to around 20 centavos per kWh downward adjustment for residential customers starting this month,” said Mr. Zaldarriaga.

In March, the power distributor raised electricity rates by P0.2639 per kWh to P12.2901 per kWh due to higher transmission charges.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera