Meralco announces rate cut as generation cost fell to a 6-year low

by Alena Mae S. Flores – January 07, 2016 at 11:50 pm

from Manila Standard

Manila Electric Co. on Thursday announced a power rate reduction of P0.21 per kilowatt-hour in January, after power generation cost dropped to a six-year low in December.

Meralco, the country’s largest power distributor, said for a typical household consuming 200 kWh, the overall electricity bill would go down by P41.30 this month.

The distributor said the overall electricity rate dropped to P8.40 per kWh in January, the lowest since January 2010. It declined by P1.27 per kWh compared to January 2015.

Meralco said the reduction in the overall rate was led by the decline in generation charge by P0.21 per kWh in December. The January generation charge at P3.92 per kWh was also the lowest since January 2010.

Meralco said generation cost of power plants under the power supply agreements went down by P0.49 per kWh, following the reduction in capacity fees of Pagbilao, Sual, Calaca and Ilijan power plants.

“This reduction in capacity fees is due to the annual reconciliation of outage allowances under the contracts approved by the Energy Regulatory Commission,” Meralco said.

The lower PSA rates also offset higher charges from independent power producers and the wholesale electricity spot market, the country’s trading floor of electricity.

The average rate of the IPPs increased slightly by P0.04 per kWh because of lower dispatch from Quezon Power Philippines and San Lorenzo power plants.

WESM rates increased P0.35 per kWh, largely caused by billing adjustments from prior periods.

Meralco sourced 48.7 percent from IPPs, 46.7 percent from PSAs and 4.6 percent from WESM.

Meralco said government taxes also decreased by P0.02 per kWh. Transmission charges also registered an increase of P0.02 per kWh due to lower load factor.

Meralco said distribution, supply and metering charges were unchanged in January, after the last reduction in July.

The distributor said it was not earning from pass-through charges, such as the generation and transmission charges.

Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the National Grid Corporation of the Philippines, which operates the power grids.