Meralco rates dip on 4th month; lower spot market prices cited

By Lenie Lectura – August 7, 2019
from Business Mirror


FOR the fourth consecutive month, power rates of the Manila Electric Co. (Meralco) for August went down to P9.5674 per kilowatt-hour (kWh), mainly due to lower spot market prices that led to a decline in generation charge.

The downward adjustment of P0.4276 per kWh will mean a decrease of around P84 for households with a monthly consumption of 200 kWh.

The fourth straight month of electricity rate decrease represents a total downward adjustment of almost P1 per kWh since May 2019.

Generation charge, the largest component of an electric bill, decreased by P0.4607 per kWh this month to P4.9620 per kWh from P5.4227 per kWh last month.

The decrease in generation charge owed primarily to lower charges from the Wholesale Electricity Spot Market (WESM).

WESM charges declined by P6.2080 per kWh due to improved supply conditions in the Luzon grid. While the National Grid Corp. of the Philippines (NGCP) placed Luzon on Yellow Alert in the first half of July, there was no Red Alert during the whole month. The share of WESM in Meralco’s supply needs went up to 11 percent.

On the other hand, cost of power from the independent power producers (IPPs) increased by P0.0911 per kWh despite the strengthening of the peso against the US dollar and lower fuel prices as a result of quarterly repricing of Malampaya natural gas and continued decline in coal prices.

Higher IPP costs were largely due to lower average plant dispatch with the scheduled maintenance of Santa Rita Modules 20, 30 and 40 in July. This was offset as cost of power from the power-supply agreements (PSAs) decreased by P0.0656 per kWh due to lower fuel prices and peso appreciation. About 67 percent of PSA costs are dollar-denominated.

IPPs and PSAs provided 41 percent and 48 percent of Meralco’s supply needs, respectively.

Meanwhile, transmission charge for residential customers increased by P0.0334 per kWh. Taxes and other charges also registered a slight increase of P0.0097 per kWh.

Meralco’s distribution, supply and metering charges, meanwhile, have remained unchanged for 49 months, after these registered reductions in July 2015. Meralco reiterated that it does not earn from the 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 NGCP. Taxes and other public policy charges like the FiT-All rate are remitted to the government.