MANILA - The country's power grid operator on Thursday said the rate hikes set to be implemented by Meralco and electric cooperatives are not due to the higher cost of power delivery but higher prices of "ancillary services" or reserve power.

In a statement, the National Grid Corporation of the Philippines said consumers can expect higher transmission charges in their September 2024 power bills "due to higher Ancillary Services (AS) rates stemming from the  resumption of the AS Reserve Market (AS-RM)."

Ancillary services mean reserve power for the grid operator and are used to balance and stabilize the grid during times of high power demand. These services are also mandated by the government.

“In compliance with directives from the Department of Energy and the Energy Regulatory Commission, NGCP contracts 50 percent of its AS requirement from firm agreements and 50 percent from the AS Reserve Market,” the company said.

It added that AS rates for the August billing period increased by 126 percent, with P0.6127 per kilowatt-hour compared to P0.2712 per kwh in July 2024.

In contrast, transmission wheeling rates, or what NGCP charges for its primary service of delivering power, have gone down by 5.5 percent to P0.4761 per kWh in August from P0.5038 per kWh in July, the NGCP said. Company spokesperson Cynthia Alabanza said the company does not earn from AS because it is a pass-through cost that is given to power generators.

"Dun sa kabuuang sinisingil namin sa customers naming, less than half ang napupunta sa amin. So kumbaga, yung more than half sa iba napupunta. Kumbaga collector lang kami," Alabanza said.

(From the total amount that we charge customers, less than half goes to us. More than half goes to other. We are just the collector.)

Meralco earlier said that power rates were climbing by P0.15 per kilowatt-hour in September because of a spike in the transmission charge due to ancillary services of the NGCP.

Power rates also spiked earlier this year as the cost of AS increased. 

CONSUMERS VS MERALCO 

Meanwhile, consumer groups slammed Meralco on several pass-through charges and have launched a campaign against costly electricity.

The Power for People Coalition has initiated "Nagmamahal, Meralco" to mobilize consumers to fight the "excessive charges that the distribution utility passes on to them."

In a statement, Aaron Pedrosa, Secretary-General of Sanlakas, stressed that the decision stretches the limit of what is allowed by the Electric Power Industry Reform Act, or EPIRA, which governs the energy sector.

“The law only allows ‘prudent’ and ‘reasonable’ economic costs to be recovered by these power companies. The ERC decision approving the staggered collection of LNG landing costs has given them a free hand to remove all skin from the game yet retain all profits. This decision, alongside the previous one on spot market costs, means 16 months of extraordinary pass-on charges collected from consumers on top of the other unjustified costs, such as fuel costs,” he said.