Cheaper gas trims Meralco rates by P0.41/kwh this month

by Myrna Velasco – May 6, 2016

from Manila Bulletin

It had been a reversal of trend as the blended pass-on rate of Manila Electric Company (Meralco) will be down P0.41 per kilowatt hour this billing month to P8.444 per kwh – that despite taking off from tight supply condition in April.

The utility firm explained that consumers will have to thank cheaper gas costs being the main factor pulling down electricity rates in this billing period.

Meralco emphasized that for average base of households consuming 200 kilowatt hours, the total reduction in the bills would hover at P82.

Collectively, the utility firm stressed that the rate cut “was due to the downward movement in generation, transmission, taxes and other charges.”

It must be culled that earlier warnings to consumers would be rate hikes this month because of the extreme supply tightness sporadically experienced last month and the activation of the interruptible load program (ILP) participants.

Compared to last year on the same billing month, Meralco noted that this month’s overall rate is lower by P1.54 per kWh at P9.98 per kWh. It is also seen lowest since January and for the past six years.

The P0.21 per kWh reduction in the generation charge component of the bill had been a major factor because of the plants utilizing cheaper gas costs – primarily the Sta Rita and Lorenzo facilities of First Gen; and the Ilijan gas plant operated by Korea Electric Power Corporation but of which capacity is administered by a subsidiary of San Miguel Energy Corporation.

“Malampaya natural gas prices are adjusted quarterly and are indexed to world crude oil prices,” Meralco explained, stating further that “the current re-pricing covers months when crude oil spot prices in the world market fell to as low as US$31 per barrel.”

The distribution firm said the three gas plants – with aggregate capacity of 2,700 megawatts, supplied 54-percent of its requirements in the past supply month.

Other rate components were also down this month – with transmission charges decreasing by P0.10 per kWh, owing to the downtrend in the ancillary services and power delivery service charges of the National Grid Corporation of the Philippines.

Additionally, taxes and other charges had been pared by P0.10 per kwh as a result also of the downtrend in generation and transmission charges.