Higher generation charge triggers October power rate increase

After two consecutive monthly rate reductions, the Manila Electric Company (Meralco) announced an increase of ₱0.3191 per kilowatt-hour (kWh) in its overall electricity rate for October.

The adjustment brings Meralco’s rate for a typical household to ₱15.0615 per kWh, up from ₱14.7424 per kWh in September.

For a residential customer consuming 200 kWh, the increase translates to about ₱64 in the monthly electricity bill.

The increase was primarily driven by the higher generation charge, which rose by ₱0.4973 per kWh.

Charges from First Gas/Prime CoreGen increased by ₱3.2206 per kWh, mainly due to higher fuel costs following the use of liquefied natural gas (LNG) for its September supply. Meralco said LNG prices remained elevated amid the continuing conflict in the Middle East.

The weakening of the peso against the US dollar also contributed to the increase, with about 89% of First Gas/Prime CoreGen costs denominated in US dollars.

Charges from the Wholesale Electricity Spot Market (WESM) likewise increased by ₱3.5167 per kWh, due to higher WESM bill adjustments and tighter supply conditions in the Luzon grid during the September supply month.

These increases were partly offset by a ₱0.7567-per-kWh decrease in charges from Power Supply Agreements (PSAs).

Meralco attributed the lower PSA charges to reduced fuel costs at South Premier Power Corp. (SPPC) following its use of Malampaya natural gas. This tempered the impact of peso depreciation, with about 54% of PSA costs denominated in US dollars.

For October, First Gas/Prime CoreGen, WESM and PSAs accounted for approximately 24%, 2% and 74%, respectively, of Meralco’s total supply requirements.

The increase in the generation charge was partly tempered by lower charges from the National Grid Corporation of the Philippines (NGCP) and a net reduction in taxes and other charges.

For residential customers, the ancillary service charge declined by ₱0.1321 per kWh due to lower charges from the Reserve Market, while the transmission charge decreased by ₱0.0063 per kWh. Combined, these brought NGCP charges down by ₱0.1384 per kWh.

Although the universal charge for missionary electrification increased by ₱0.0634 per kWh following a recent directive from the Energy Regulatory Commission (ERC), taxes and other charges posted a net decrease of ₱0.0398 per kWh.

Taxes alone declined by ₱0.1436 per kWh, which Meralco attributed to the higher share of indigenous natural gas, which is exempt from value-added tax (VAT), as well as the removal of VAT on the system loss charge.

Generation, transmission and ancillary service charges are pass-through charges that Meralco collects from customers and remits to power suppliers and NGCP, respectively. Taxes, universal charges and other public policy charges are likewise remitted to the government and relevant agencies.

Meanwhile, Meralco said it is ready to implement the rate adjustments ordered by the ERC following the regulator’s approval of an average distribution rate of ₱1.48 per kWh for the utility’s First Regulatory Period (1RP), covering July 1, 2026 to June 30, 2030.

Meralco said it has yet to receive a copy of the ERC’s decision but welcomed the approval, saying it addresses outstanding regulatory matters and provides greater stability for the energy industry.

“We believe that this will allow Meralco to move forward with greater clarity as we pursue investments and initiatives to modernize our distribution network and enhance service delivery,” Meralco Senior Vice President and Head of Regulatory Management Atty. Jose Ronald V. Valles said.

He said these investments include advanced metering infrastructure, cybersecurity and other network modernization projects aimed at improving operational efficiency, strengthening system reliability and enhancing service for Meralco’s customers over the next four years.

Meralco also noted that despite peso depreciation, higher global material costs, increases in basic commodity prices and higher minimum wage rates over the past 15 years, its actual distribution charge has not increased and even declined to ₱1.35 per kWh effective 2016.

The ERC has also approved Meralco’s application to refund ₱2.64 billion, equivalent to an average refund of ₱0.1020 per kWh across all customer classes and ₱0.1733 per kWh for residential customers.

The refund will begin with the November 2026 billing cycle and will be implemented over six months, or until the full amount has been returned to customers.

“We welcome the regulator’s prompt action on our latest refund application, which we hope will give immediate relief to consumers,” Valles said.

The latest refund covers Meralco’s application for the lapsed period from January to June 2026. The application was filed in compliance with previous ERC orders covering periods when distribution utilities, including Meralco, did not have a rate reset.

Meralco subsequently filed adjustments with the ERC to account for the difference between its actual weighted average tariff (AWAT) and its approved distribution tariff during the declared lapsed period.

Meralco is also implementing two simultaneous refunds amounting to a combined ₱1.0139 per kWh for residential customers, covering lapsed periods from July 2022 to December 2025.

Meralco prepares for El Niño

Meralco also assured customers that it is preparing for the potential impact of the El Niño phenomenon, working with the government, particularly the Department of Energy (DOE) and other relevant agencies, to monitor developments and prepare for a possible increase in electricity demand.

The utility said it has contracted sufficient power supply to meet the requirements of its more than 8.3 million customers. It is also conducting regular maintenance and implementing upgrades and improvements to its distribution network.

“With higher temperatures expected during the El Niño, we anticipate an increase in electricity demand. We therefore call on our customers to be mindful of their consumption and to practice energy efficiency, which will also help in managing their electricity bills,” Meralco Vice President and Head of Corporate Communications Joe R. Zaldarriaga said.

Meralco advised customers to unplug appliances when not in use, maximize natural light where possible and set air conditioners at 25°C, while ensuring regular maintenance for efficient operation.

It also advised customers to avoid overloading refrigerators to allow proper air circulation and to iron clothes in larger batches.

As an additional contingency measure, Meralco continues to encourage businesses and industrial establishments to participate in the government’s Interruptible Load Program (ILP), which supports demand-side management during periods of tight power supply.

Under the ILP, participating large-load customers may use their own generator sets or temporarily adjust their operations instead of drawing electricity from the grid when needed. This frees up available power for other customers, particularly households, during Red Alert conditions or when available supply is insufficient to meet demand, helping reduce the risk of power interruptions.

Customers may report electricity service concerns through the My Meralco app, Meralco’s official social media accounts, by texting 0920-9716211 or 0917-5516211, or through the Meralco Hotline at 16211.