Home Top News Expected lower consumption to offset generation costs — Meralco

Expected lower consumption to offset generation costs — Meralco

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MANILA Electric Co. (Meralco) on Tuesday said the projected decrease in power consumption expected in the coming months may mitigate the impact of higher generation costs.

“The consumption patterns of customers in June, which will have an impact in the July billing month, usually taper off, especially when the rainy season is declared,” Meralco Vice-President and Head of Corporate Communications Joe R. Zaldarriaga said during a press briefing.

“With lower consumption patterns, the impact of this will offset the deferred generation charge,” he added.

Last week, the Energy Regulatory Commission (ERC) issued an order directing the Independent Electricity Market Operator of the Philippines, which operates the Wholesale Electricity Spot Market (WESM), to divide the spot market bill for May over a four-month period.

The ERC also mandated all private distribution utilities and electric cooperatives to stagger the collection of generation charges from WESM purchases for the May billing period in equal installments starting in June.

As a result of this directive, Meralco announced that customers within its franchise area will see a reduction of P1.96 per kilowatt-hour (kWh) in their electricity bills this month. This marks a reversal from the previously announced increase of P0.64 per kWh to P12.06 per kWh due to the spike in generation costs.

According to Meralco, the total deferred generation costs from suppliers and WESM charges amounted to P8.9 billion. This amount will be collected in equal monthly installments of P3 billion, equivalent to an estimated rate of P0.77 per kWh.

“Yes, we will have an additional P0.77 next month, but hopefully, with lower consumption patterns, this will impact the overall bills. Hopefully, even with the additional P0.77, this will be mitigated by lower power consumption,” he said, noting that lower power demand will also ease the pressure in the spot market.

Mr. Zaldarriaga cited that the pressure in WESM, coupled with the surge in power demand, are the main factors resulting in the increase of power prices in the spot market.

“The pressure in WESM probably is not going to be the same anymore compared to the previous months where there was tightness,” he added.

He also said that due to the staggered collection of generation costs, Meralco is anticipating higher generation charges in the next three months.

“We would like to manage the expectations of our customers by advising that there is an expected upward movement in the generation charge component over the next three months,” he said.

Meralco also said that the anticipated increase in generation charges will not necessarily lead to an increase in the overall electricity bills of customers. Electric utility bills include other components such as charges from independent power producers and transmission charges, Mr. Zaldarriaga noted.

POWER SUPPLY BIDSAt the same time, Meralco said it is inviting bids to procure 400 megawatts (MW) of capacity to meet its mid-merit electricity needs starting Aug. 26, 2025.

“We encourage all power suppliers to participate,” Jose Ronald V. Valles, Meralco’s senior vice-president and head of its regulatory management, told reporters on Tuesday.

“This assures a more reliable and stable supply for Meralco consumers,” he added.

He said the competitive selection process (CSP) aims to secure a 15-year power supply agreement.

According to the company’s bid invitation, each bidder must offer a minimum contract capacity of at least 150 MW.

Meralco has requested power generators to submit their expression of interest for the power supply bidding by July 1.

The company has scheduled a pre-bid conference for July 11, with the bid submission deadline set for Aug. 9.

In compliance with the Energy department’s directive from last year, Meralco has encouraged power suppliers with natural gas-fired plants to participate in the bidding process and prioritize the use of indigenous natural gas.

Government regulations mandate distribution utilities to select the most cost-effective electricity supply through a competitive bidding process.

Mr. Valles said the 400-MW CSP would be the last for the year.

Last week, Meralco started seeking bids for the 600-MW baseload power supply to secure a 15-year power deal, scheduled to start on Aug. 26, 2025.

The power distributor also launched a bidding for 500 MW of renewable energy capacity to comply with the DoE’s policy on renewable energy portfolio standards.

The renewable portfolio standards mandate distribution utilities, generation companies and retail electricity suppliers to get a portion of their energy supply from eligible renewable energy sources.

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. — Ashley Erika O. Jose and Sheldeen Joy Talavera

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