MANILA, Philippines - Customers of Manila Electric Co. (Meralco) will see higher electricity bills this month, with the increase in spot market prices pushing the generation charge up.

In a statement to the Philippine Stock Exchange, the country's largest power distributor said generation charge for August is up 44 centavos to P6.0962 per kilowatt-hour (kWh) from P5.6546 per kWh in July.

The adjustment translates to an increase of around 4% in power bills.

Meralco said this month's generation charge is second highest for 2010 after the P6.77 per kWh peak registered in April.

The effective price at the Wholesale Electricity Spot Market (WESM) increased by P3.08 per kWh to almost P11 per kWh in July from only P7.90 per kWh in June, noted Meralco, which sources 10% of its power requirements from WESM.

Cost of power from the National Power Corp. (Napocor) fell, however, by 63 centavos to P4.96 per kWh in July from P5.59 per kWh in June. Power from independent producers, meanwhile, increased slightly by 7.7 centavos.

Meralco raised concerns over the operations of the spot market in February, noting that spikes in prices were unprecedented in the last few years.

But the power distributor said that the onset of the rainy season and availability of cheaper hydro power will ease prices in the WESM.

It also assured it "has been actively seeking to source more power both from Napocor and from power generators under direct contracts" due to the high cost of power in the market.

Meralco clarified it does not earn from the generation charge, which comprises 60% of the average electricity bill.

For lifeline residential customers consuming 100 kWh or less, this month's increase will be an average 22 centavos.