Meralco's February 2025 Rate Increase: What Consumers Need to Know

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Starting February 2025, Manila Electric Company (Meralco) has announced an increase in electricity rates by P0.2834 per kilowatt-hour (kWh), raising the overall rate to P12.0262 per kWh from P11.7428 per kWh in January. 

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Impact on Residential Bills

This adjustment translates to an additional P57 for households consuming 200 kWh, P85 for 300 kWh, P114 for 400 kWh, and P144 for 500 kWh. 

Primary Factors Behind the Increase

Higher Generation Charges: The generation charge, which typically accounts for at least half of a household’s total power bill, rose by P0.3845 per kWh due to increased costs from Independent Power Producers (IPPs) and Power Supply Agreements (PSAs). 

Independent Power Producers (IPPs): Charges from IPPs increased by P0.8355 per kWh, attributed to:

Lower average plant dispatch.

A weaker peso, affecting 97% of IPP costs.

Higher liquefied natural gas (LNG) terminal fees imposed by First Gas Sta. Rita and Sta. Lorenzo. 

Power Supply Agreements (PSAs): Charges from PSAs climbed by P0.0837 per kWh, influenced by the depreciation of the peso, which affected 61% of PSA costs. 

Wholesale Electricity Spot Market (WESM): A decrease of P0.3005 per kWh in WESM charges partially offset the overall rate increase. This decline was due to lower average and peak demand in the Luzon grid, which helped mitigate the impact of increased power plant outages. 

Other Contributing Factors

Transmission Charges: A slight decrease of P0.0013 per kWh was observed, aided by lower ancillary service charges. 

Taxes and Pass-Through Charges: An increase of P0.1289 per kWh was noted, reflecting the impact of higher Energy Regulatory Commission (ERC)-approved universal charges for missionary areas. 

Meralco's Response and Recommendations

Meralco has emphasized the importance of energy efficiency, especially with the upcoming summer months. The company encourages consumers to adopt energy-saving practices to help mitigate the impact of higher electricity rates. 

Looking Ahead

Meralco is also proposing a refund of approximately P19 billion to consumers, following an ERC directive regarding the regulatory reset process. The company plans to implement this refund over 36 months, which could provide some relief to consumers in the future. 

Conclusion

The February 2025 rate increase by Meralco is primarily driven by higher generation charges, particularly from IPPs and PSAs. While this results in increased electricity bills for consumers, understanding the factors behind the hike can help in managing energy consumption more effectively.

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