Energy Secretary Sharon Garin said on Tuesday that the peso’s decline against the US dollar could push electricity rates higher, because power companies must spend more pesos on imported fuel.
The peso closed at a record ₱64.17 per dollar on October 27, after touching an intraday low of ₱64.20. It was the first time the currency moved past the ₱64 level.
Garin made the remarks to reporters at Singapore International Energy Week. She said a weaker peso makes coal, diesel and liquefied natural gas (LNG) more expensive for Philippine energy companies, since these fuels are priced in dollars. Those costs can be passed on to consumers through electricity rates.
“So ₱64 is probably the highest we have now,” Garin said, adding that the effect would show up in the per-kilowatt-hour rate.
Rates already rising for Meralco customers
Customers of Manila Electric Co. (Meralco) have already seen an increase. The company raised its October residential rate by ₱0.3191 per kilowatt-hour (kWh), to ₱15.0615 from ₱14.7424 in September. A household that uses 200 kWh a month would pay about ₱64 more on its bill.
Meralco attributed the increase mainly to higher generation charges. These include rising fuel costs and the effect of the weaker peso on power supply contracts priced in dollars.
The Energy Regulatory Commission (ERC) recently approved an average distribution rate of ₱1.48 per kWh for Meralco, up from ₱1.35 per kWh, following a regulatory review. Meralco had asked for ₱2.34 per kWh. The approved rate covers distribution charges only, not the entire electricity bill.
Government response
Garin said she would meet ERC Chairperson Francis Saturnino Juan to discuss ways to cushion or delay increases in electricity rates. The Department of Energy (DOE) is also considering asking oil companies to apply fuel price adjustments gradually instead of in large single increases. Garin said the agency has made similar requests to fuel retailers before, and they generally cooperated.
If the cost to households becomes too heavy, the DOE may recommend additional assistance, including possible subsidies, for the government to consider.
El Niño adds to supply concerns
The DOE is also watching weather conditions. Hotter and drier weather linked to El Niño could raise the use of air-conditioning and other cooling appliances. That would put more pressure on power supplies and could push costs up further, the report said.
Garin said the DOE will keep looking for ways to limit the impact of higher energy prices on consumers.
