CANE POINTS: Transmission Rate Up, Distribution Rate Steady

Last week, Negros Power announced that its July power rates registered a slight increase from Php11.14 per kilowatt-hour in June to Php11.3727 kWh this July, or a Php0.23 increase per KWh. This translates to a Php23.00 increase for a household consuming 100 kWhs for this month.

The increase was attributed to the uptick in the National Grid Corporation of the Philippines’ (NGCP) transmission charge from June’s PhP1.2825/kWh to PhP1.3639/kWh in July. The generation charge also increased by almost Php1.00/kWh, from Php6.45/kWh in June to Php6.54/kWh in July.

However, the distribution charge, or the portion of the electric bill which goes to Negros Power, remains the same at Php1.1866/kWh. This translates to roughly 10% of the rate per kWh. Only roughly 10% of what consumers pay for their electric bill goes to Negros Power for its operations. And this distribution charge has remained the same since 2010.

In other words, Negros Power has little or almost nothing to do with any fluctuation in the electric bill, because the portion of the bill which goes to Negros Power remains the same.

The generation and transmission charges mainly cause the fluctuations in the power bill. Payment for the generation charge goes to power producers which supplied electricity to Negros Power, while payment for the transmission charge goes to NGCP, as “toll fee or rental” for the use of the infrastructure (high voltage transmission lines) through which electricity passes from the power producers to Negros Power and its consumers.

The transmission charge is composed of two components: the transmission wheeling charge and the ancillary services (AS) charge. Out of the total transmission charge, only the transmission wheeling charge goes to NGCP, while the AS charge goes to the AS providers. Like Negros Power which serves simply as collecting agent for the generation and transmission charges, NGCP is also the collecting agent of the AS charge.

“For the June 2025 billing period, both AS and NGCP’s transmission wheeling rates increased, but the surge in AS costs accounts for most of the adjustment. Overall equivalent average transmission rates for the June 2025 billing period increased by 5.49% to PhP1.2113/kWh, from May’s PhP1.1482/kWh. The increase was driven by a 9.32% increase in ancillary service rates in the June 2025 billing period. From PhP0.5655/kWh in May, AS rates increased to PhP0.6182/kWh,” NGCP clarified.

NGCP stated that, out of the Php0.0661/kWh increase in average transmission rates for June (which applies to the July billing), Php0.0527/kWh was due to the increase in AS charges from PhP0.5655/kWh in May (which applies to the June billing) to PhP0.6182/kWh in June (which applies to the July billing).

On the other hand, NGCP pointed out that its transmission wheeling rates increased only by Php0.0018/kWh, from PhP0.4593/kWh in June to PhP0.4611/kWh in July. Out of the total transmission charge of Php1.3639/kWh, only PhP0.4611/kWh goes to NGCP’s transmission wheeling charges, while the bulk goes to AS charges.

“As rates pertain to the pass-through costs for power supplied by AS providers to stabilize the grid during power supply-demand imbalance. AS charges are remitted directly to generating companies with bilateral contracts with NGCP, and to the Independent Electricity Market Operator of the Philippines (IEMOP) for the AS sourced from the Reserve Market,” NGCP explained in its statement last week.

As to the generation charge, it increased by almost Php1.00/kWh compared to last month.
The generation charge is prone to fluctuations because of the numerous factors that affect its final cost. Foremost of these variable factors is the allowable adjustments and recoveries for instabilities in global prices of imported feedstock, like coal and bunker fuel, which are used by most base load power plants which supply the minimum 24/7 power requirement of a distribution utility like Negros Power.

Add to that the unpredictable prices dictated by supply and demand in the entire national grid from the Wholesale Electricity Spot Market (WESM). Factors affecting WESM prices are the scheduled preventive maintenance and emergency shutdown of base load power plants.

This causes a power imbalance in the grid, which drives up AS charges and exerts pressure on available power supply in the long run. High demand amid reduced supply equals to higher cost of electricity.

Amid these factors affecting the generation and transmission charges, a distribution utility has its hands tied when it comes to fluctuations in the power rates.

Consumers should be thankful when power rates decrease, but they should not blame the distribution utility when generation and transmission rates increase, causing a corresponding increase in the power rates, because, despite these fluctuations in generation and transmission charges, the distribution utility’s distribution charge remains the same.*