THE uptick in global prices of coal and crude oil as well as the continued weakening of the Philippine peso could jack up the generation cost, a big component that consumers pay in their electric bill.
About 60 percent of the electric bill is the generation charge or the cost of power that distribution utilities like the Visayan Electric purchase from independent power producers and producers it has power supply agreements with.
AboitizPower Coal Business Unit president and chief operating officer Celso Caballero on Wednesday, Sept. 28, 2022 said a number of factors are driving the cost of power, including Russia’s invasion of Ukraine that has disrupted the value chain of gas and coal globally.
“Currently, both gas and coal are terribly expensive,” he said.
The Philippines is largely a coal consuming country with coal having the highest contribution to the power generation mix at 58 percent in 2021.
A weaker peso could also jack up the generation rate as generation companies import equipment and raw materials.
The peso closed at P58.97 Thursday, Sept. 29 from P58.98 on Wednesday against the US dollar, after hitting an intra-day low of P59.
The peso began the year at around P51 to the US dollar.
Caballero also cited the looming winter season in Europe that could “further exacerbate the current situation.”
“But we expect in 2023, barring any other unfortunate events such as wars, prices should begin to temper and go back down,” said Caballero. “It would be a gradual normalization.”
Visayan Electric president and chief operating officer Raul Lucero said the price of electricity at this point in time is “really very high.”
The residential power rate for Visayan Electric is P15.37 per kilowatt hour for the billing month of September-October, up from P15.24/kWh for the August-September billing period, which was already higher than the P14.35/kWh for the July-August billing period.
Amid the rising power rates, Caballero assured consumers that AboitizPower has employed various strategies to manage the increasing costs.
“These macro economic factors will affect us... but we in Aboitiz, have employed physical hedges, negotiated best contracts as possible with our coal suppliers and partnered with coal traders and suppliers in order to get the best rates as possible for the Visayas community, as well as financial hedges to manage the cost of power,” said Caballero.
While power rates are still up, Lucero encouraged consumers to wisely manage their power consumption.
“We have energy conservation tips in our website that you can check so you will not be overwhelmed by the bill,” he said.
As for water rates, Metropolitan Cebu Water District (MCWD) spokesperson Minerva Gerodias told SunStar Cebu on Thursday, Sept. 29, 2022, that while the weaker peso might affect its operations, its water rates will remain the same.
Being a government entity, MCWD needs to secure approval from the Local Water Utilities Administration (LWUA) before it can initiate any changes to its water rates, Gerodias said.
She added that like other water districts in the country, MCWD is also required to wait five years before it can propose a water rate adjustment.
“So even if the dollar surges, but it hasn’t yet been five years since our last increase, then we really cannot increase,” Gerodias added.
The last MCWD water rate adjustment was implemented on Jan. 1, 2015.
Gerodias said while LWUA allows water districts to apply for a rate adjustment every five years, MCWD opted to put it on hold in 2020 in consideration of the Covid-19 crisis.
And it was only last July that MCWD announced that it was seeking a 70 percent increase in its water rates for implementation beginning July 1, 2023 with an adjustment in the water tariff by 60 percent, and then in 2024 with a supplementary adjustment by 10 percent.
MCWD is sticking with this proposed adjustment, which has not yet been approved by LWUA pending the completion of public hearings.
Gerodias added that MCWD has not entered into foreign loans that could be affected by the fast depreciation of the peso.
MCWD now collects from residential connections a minimum water fee of P152 for the first 10 cubic meters of water consumed or P15.20 per cubic meter.
An average household connected to MCWD consumes 21 cubic meters of water per month. Its water fee is P339.80 or a total bill of P430.99 including other charges of P91.19 that covers the franchise tax, power cost adjustment (PCA) and purchased water adjustment (PWA).
In the proposed adjustment, the same household will pay a water fee of P543.68 or a total bill of P561.90 including franchise tax of P10.87 and PWA of P7.35. PCA is already incorporated in the proposed adjusted rates.
In July 2024, this household’s total bill would rise to P617.36.