Meralco rates down by P0.13/kwh in June

by Myrna Velasco – June 8, 2016

from Manila Bulletin

With capacity boost in the power system, the customers of Manila Electric Company (Meralco) will be enjoying an average P0.13 per kilowatt-hour (kwh) reduction in their electric bills this June despite the still-scorching weather in the last supply month. The utility firm announced that its household customers with typical consumption of 200 kwh will enjoy that much level of rate relief.

Effectively, the overall tariff will be down to P8.32 per kwh in this billing month, lower by P1.08 per kwh on a comparative month last year at P9.40 per kwh.  This has been mainly attributed to “the downward movement in the generation charge.”

Meralco noted the lower cost of generation technically “offset a higher transmission charge,” which could be attributed to the ancillary services component of the billed rates of National Grid Corporation of the Philippines, and partly due to the ancillary service charge recoveries of the Power Sector Assets and Liabilities Management Corporation. “The lower generation charge more than offset an increase in the transmission charge of P0.066 per kwh due to higher ancillary service charges,” the distribution firm said.

Meralco added that “beginning this June and up to November, the transmission charge will include the collection of an ancillary service differential that will go to PSALM.”

The other cost components that have influenced Meralco’s lower tariffs this billing month included taxes and other charges which had been pulled down by a combined amount of P0.033 per kwh.

For the generation charge, it was emphasized that overall rate cut had been driven by softening of prices in the Wholesale Electricity Spot Market.

The overall WESM charges had been down by P0.98 per kwh “due to lower spot prices driven by the fewer generator outages during the May supply month compared to the previous month,” the utility firm explained.

Meralco, as could be gleaned, had relatively high exposure in the spot market in May at 12.8-percent from the previous supply month’s 11.7-percent.

The utility firm’s supply procurement from contracted independent power producers (IPPs) also had cost-softening effect – effectively for a rate reduction of P0.22 per kwh on billed rates; while supply from power supply agreements (PSAs) had been slightly higher by P0.02 per kwh.