ILOILO City – Consumers in Iloilo City may see higher electricity bills in the coming months as generation charges are projected to increase by around P2 per kilowatt-hour (kWh), prompting MORE Electric and Power Corp. (MORE Power) to seek regulatory approval for a staggered payment scheme to cushion the impact on customers.
Generation charges refer to the cost of producing electricity and are considered pass-through charges, meaning distribution utilities merely collect these fees on behalf of power generators and do not earn from them.
Justin Lunar, supervisor of MORE Power’s Energy Sourcing Department, said the distribution utility has requested the Energy Regulatory Commission (ERC) to allow the company to spread out payments for its purchases from the Wholesale Electricity Spot Market (WESM).
“We sent a request to the ERC, requesting a staggered payment to our Independent Electricity Market Operator of the Philippines (IEMOP) billing. What we will be billing in the next months is expected to be pricier compared to previous months,” Lunar said.
The proposed staggered payment arrangement would allow generation cost increases to be passed on to consumers gradually instead of being reflected in full in a single billing cycle.
“We would compute the adjusted rates once ERC approves the spread in payments reflected in the IEMOP bill,” he explained.
According to Lunar, preliminary data indicate that generation charges could increase from about P5.60 per kWh last month to approximately P7.70 per kWh this June – or an increase of around P2 per kilowatt-hour.
He attributed the projected increase to supply shortages in the Visayas grid, a series of yellow and red alerts, and outages involving several major power plants.
“Electricity prices in the market are currently very high. The alerts have a huge impact because supply remains insufficient, particularly in the Cebu-Negros-Panay grid. Even during yellow alerts, we have experienced manual load dropping, and this pushes market prices to their maximum levels,” he said.
He noted that four major power plants in the Visayas experienced outages beginning May 28, further tightening supply during a period of high electricity demand brought about by the summer season.
“Demand remains high while available supply is low, causing market prices to increase,” Lunar said.
Electricity prices in the spot market have been reaching the maximum allowable rate, especially during afternoon hours when solar generation begins to decline, he revealed.
“In the market, prices can go as low as negative P10 per kilowatt-hour, but they can also reach the maximum price of P32 per kilowatt-hour. This usually happens in the afternoon when solar plants begin reducing output and other generators, including diesel plants with higher operating costs, have to take over,” he explained.
He added that congestion charges and transmission losses have further contributed to elevated electricity costs.
The expected increase comes after the ERC lifted the nationwide suspension of the WESM in May and resumed normal electricity trading operations.
During the suspension period, the ERC implemented the Modified Administered Price (MAP) mechanism, which capped spot market prices and protected consumers from extreme volatility linked to global fuel price fluctuations and geopolitical tensions in the Middle East.
“The Modified Administered Price does not reflect the actual market situation because it is based on historical data. It helped before, but now suppliers are recovering and we have observed that bids are increasing compared to before,” Lunar said.
He added that MORE Power has already maximized its bilateral power supply contracts, leaving spot market transactions as the primary source of additional generation costs.
“The biggest effect is what is in the market, the WESM, because it follows the law of supply and demand,” he said.
Despite the projected increase in generation costs, MORE Power assured consumers that its distribution charges remain unchanged.
“There will be no increase on the distribution side unless the ERC issues an order approving adjustments in our Distribution System Management rate,” Lunar said.
He pointed out that the company’s distribution charges have remained stable since MORE Power began operations in Iloilo City.
“For the past four years, there has been no increase in our distribution charge. The only recent adjustment involved an ERC-approved refund to consumers,” he said.
Lunar emphasized that any increase in electricity bills would stem from generation and potentially transmission costs, not from the distribution component charged by MORE Power./PN
