ERC backs Meralco plan to ease May power rate hike to P0.435 per kWh

The Energy Regulatory Commission (ERC) on Monday said it has no objection to Manila Electric Company's (Meralco) proposal to adjust its generation charge increase for May 2026, potentially reducing the hike from a projected P0.99 per kilowatt-hour (kWh) to P0.4350 per kWh.

In a statement, the ERC confirmed that Meralco's plan to immediately implement adjustments in the collection of generation costs could lower the impact on consumers by up to 58 percent. The commission said the move aligns with its push for rate stability and consumer protection.

ERC: No objection to Meralco proposal

ERC Chairperson Monalisa Dimalanta said the agency supports Meralco's proposal to spread out the recovery of higher generation costs over a longer period. This approach, she explained, avoids a sharp spike in power bills in May.

"The ERC has no objection to Meralco's plan to implement the adjustments immediately. This will reduce the increase to P0.4350 per kWh from the originally projected P0.99 per kWh," Dimalanta said in a briefing.

How the adjustment works

Meralco's proposal involves deferring part of the increase in generation costs that suppliers are charging the utility. Instead of passing the full cost to consumers in one month, the distribution utility will collect the amount over several months.

The ERC said the exact timeline and mechanism for the deferred collection will be finalized after Meralco submits its formal application. The commission expects the utility to file the request within the week.

"We are looking at a mechanism where the deferred amount will be collected over a period of three to six months, depending on the final terms," Dimalanta said. "This will give consumers more time to adjust."

Meralco serves over 7.6 million customers in Metro Manila, Rizal, Cavite, Bulacan, Laguna, and parts of Pampanga and Batangas.

Factors behind the generation charge increase

The projected increase in generation charges stems from higher costs of power from independent power producers (IPPs) and the Wholesale Electricity Spot Market (WESM). Meralco attributed the rise to tighter supply conditions and higher fuel prices in the first quarter of 2025.

Data from the Department of Energy shows that spot market prices in Luzon increased by an average of 18 percent in March compared to the previous month. Coal prices, which affect IPP costs, also edged up by 5 percent in the same period.

The ERC noted that the increase is part of a seasonal pattern. "We typically see higher generation charges during the summer months because of increased demand and tighter supply," Dimalanta said.

Consumer groups react

Consumer advocacy groups welcomed the ERC's decision but urged the commission to ensure transparency in the deferment process. The National Association of Electricity Consumers for Reforms (Nasecore) said the adjustment must not lead to hidden charges later.

"We appreciate the ERC and Meralco for considering the burden on consumers. However, we want a clear schedule of the deferred amount and how it will be reflected in future bills," Nasecore secretary general Pete Ilagan said.

The group also called for a review of power supply agreements to address the root cause of volatile generation costs.

Meralco's response

Meralco spokesperson Joe Zaldarriaga confirmed the utility will file the necessary application soon. He said the company is committed to keeping rates as low as possible while maintaining reliable service.

"Our proposal is designed to manage the impact on our customers. We hope this provides relief as we head into the peak summer months when electricity consumption typically rises," Zaldarriaga said.

He added that Meralco is also exploring options to source cheaper power, including the implementation of the competitive selection process for new supply contracts.

Impact on typical household

Based on ERC calculations, a typical Meralco household consuming 200 kWh per month will see an increase of around P87 in their May bill if the full P0.99 per kWh hike pushes through. With the adjusted proposal, the increase drops to approximately P87, or P1.4 less, depending on the final rate.

The commission stressed that the adjustment only covers generation charges, which comprise about 50 percent of the total electricity bill. Transmission and distribution charges remain unchanged.

Forward-looking statement

The ERC said it will monitor the implementation of Meralco's plan and review the utility's compliance with tariff caps. The commission also reminded consumers to conserve energy during the summer months to manage their bills.