Meralco rates down by P0.11/kwh this month; Luzon under ‘yellow alert’

by Myrna Velasco – August 8, 2016

from Manila Bulletin

Residential customers will enjoy a reduction of average P0.11 per kilowatt hour (kwh) in their electric bills this month, according to Manila Electric Company.

But this rate relief may just be temporary with anticipation that electric bills will go up in September due to persistent tight supply conditions in the Luzon grid from the latter part of July until this early part of the month.

As this developed, a ‘yellow alert’ condition had been declared anew for Luzon grid on Monday (August 8) despite depressed demand due to cold weather brought about by the onset of low pressure area (LPA) in the area.

Until the simultaneous shutdowns of power plants are resolved and their capacities are brought back on-line, it will be a continuous torment of brownout threats for consumers in the grid.

For this August, the utility firm noted that its overall rate had been cut to P8.50 per kwh from last month’s P8.61 per kwh. Households with average consumption then of 200 kilowatt hours will have corresponding cost reduction in their bills amounting to P22.

“The reduction is due to the downward movement in the generation charge, which more than offset a higher transmission charge,” Meralco has explained. Ancillary services or the reserves procurement cost of National Grid Corporation of the Philippines (NGCP) had been higher by P0.08 per kwh; and there had also been concomitant upward adjustment in taxes and other charges by P0.01 per kwh.

On a month-to-month comparison, this year’s August rate is still P0.62 per kwh vis-à-vis last year’s level of P9.12 per kwh.

Meralco further noted that “the decrease in the overall rate is primarily due to the generation charge, which is lower by P0.20 per kwh,” with billings from the Wholesale Electricity Spot Market (WESM) softening by a substantial scale of P3.48 per kwh.

The downtrend in spot market prices had been more than enough to offset the R0.16 per kwh hike in procurement cost that the utility firm had with its contracted independent power producers (IPPs). That had been mainly due “to the lower dispatch of San Lorenzo and Sta Rita (gas plants).”

Next month, however, will be an entirely different story as the impact of power supply deficiency persisting in the past three weeks may already make its dent in the electric bills.

Meanwhile, for supply sourced from Meralco’s power supply agreements (PSAs), prices had been relatively “flattish’, with just a very negligible upward adjustment of P0.002 per kwh.

The contracted IPPs and bilateral supply deals remained to be the main source of power for Meralco last month with 49.3-percent and 40.3-percent shares, respectively.