Power rates seen to go up as peso continues to weaken

MANILA — Meralco customers may face higher electricity rates as the peso’s continued depreciation is expected to drive up power generation costs, the utility giant said Wednesday.

The peso closed at a fresh record low of P64.17 against the US dollar on Tuesday but recovered slightly on Wednesday.

“Definitely, it will have an impact, especially on the pass-through generation cost, kasi more than 50 percent of our sources are dependent on forex (foreign exchange), especially yung mga gas power suppliers namin,” said Meralco Senior Vice President and Regulatory Management Head Jose Ronald Valles.

“But we’re finding ways on how to manage and offset the increases,” he added.

Meralco Chairman and CEO Manuel Pangilinan, however, said the peso’s depreciation would not affect the company’s distribution charges, as Meralco has no foreign debt.

“We have no foreign debts, there’s no negative impact on the pricing,” he said.

Still, Pangilinan said the peso’s weakness underscores the need for the Philippines to develop more domestic energy sources, including renewable energy.

“It heightens the need for domestic fuel, and of course solar is the most prominent of the renewables,” he said.

He also pointed to the need to explore the country’s own oil and gas resources, including projects being pursued by PXP Energy, which is part of the MVP group.

But he said the moratorium has constrained exploration in parts of the South China Sea, while PXP’s other ventures have yet to progress beyond preliminary surveys.

“There’s been a moratorium, at least in South China Sea. PXP has got some projects but we’re still in the survey part of it. We’re still far away from any developmental activity,” he said.

“It’s going to be tough,” the tycoon added.

Despite continued volatility in foreign exchange rates and fuel prices, Pangilinan remains confident that Meralco can achieve its P56.6-billion core net income target for 2026 “barring any significant unforeseen developments.”

Meralco reported a 26 percent increase in consolidated core net income for the third quarter, reaching P18.3 billion from P14.5 billion in the same period last year.

Its bottomline for the January-to-September period likewise grew by 12 percent year-on-year to P44.8 billion, from P40 billion.

The company said the gains were supported by its distribution utility, power generation and retail electricity supply operations.

Moving forward, Meralco Chief Operating Officer Ronnie Aperocho expects electricity consumption to rise further as El Niño brings hotter conditions in the coming months.

“El Niño will give us an uplift in sales because of higher demand for cooling,” Aperocho said.