Meralco cuts electricity rates as oil companies slash fuel pump prices
ELECTRICITY rates this month and fuel prices this week are going down.
On Monday, the Manila Electric Company (Meralco) announced a P0.2087 reduction in August rates to P9.5458 per kilowatt hour (kwh) from last month’s P9.7545 per kwh. This is equivalent to a decrease of around P42 in the total bill of a residential customer consuming 200 kwh.
With this month’s adjustment, Meralco’s rates now have a combined reduction of P0.9154 per kwh over the past two months and a net decrease P0.2315 per kwh since the start of the year.
Meralco earlier anticipated a rate increase this month mainly because of an increase in Malampaya gas prices by as much as 15 percent. However, this was mainly offset by the rate reduction orders of the Energy Regulatory Commission (ERC).
“Three factors helped push down August rates. These are the completion in July of recovery of April’s deferred generation costs, reduce use of expensive alternative fuel by First Gas, and Ercordered reduction in Meralco’s distribution, supply, metering charges beginning August, more than offset the effect of Malampaya’s quarterly repricing,” said Meralco utility economics head Lawrence Fernandez.
Generation charge, which represents the bulk of the consumers’ electric bill, went down by P0.1944 to P6.5812 per kwh this month from P6.7756 per kwh last month due to the decrease in charges from Power Supply Agreements (PSAS), which more than offset increases in charges from Independent Power Producers (IPPS) and the Wholesale Electricity Spot Market (WESM).
PSA charges registered a reduction of P0.4273 per kwh as this month’s rate no longer included recovery of deferred generation costs for the April bill. Higher excess energy of some PSAS, which are priced at discount, also contributed to the decrease.
On the other hand, IPP charges increased by P0.4213 per kwh with the continued rise in international fuel prices. The underlying Malampaya natural gas price increased by 15 percent starting this quarter, reflecting recent spikes in world crude oil prices.
Power suppliers that have passthrough adjustments in Malampaya fuel—namely, First Gas-sta. Rita, First Gas-san Lorenzo, and First Natgas-san Gabriel—accounted for 44 percent of Meralco’s supply during the period. Reduced use of more expensive alternative fuel by First Gas plants mitigated further increase in IPP charges.
Meanwhile, charges from the WESM remained high, registering an increase of P0.0433 per kwh due to tight supply conditions in the Luzon grid.
Despite the reduction in demand, the grid was placed on Yellow Alert last July 5 due to insufficient operating reserves after the forced outage of several large power plants. In addition, persistently high spot market prices triggered the imposition of the secondary price cap almost 27 percent of the time.
PSAS, IPPS, and WESM accounted for 52 percent, 43 percent, and 5 percent, respectively, of Meralco’s energy requirement for the period.
The implementation of distribution-related refunds totaling P48.3 billion continues to temper customers’ monthly bills. This is equivalent to total refund rate of P1.8009 per kwh for residential customers.
Also contributing to the overall rate reduction for August was the reduction in Meralco’s distribution charge, equivalent to P0.0360 per kwh for typical residential customers.
This followed the ERC decision last June 16 on Meralco’s final Interim Average Rate, which reduced the final average distribution rate for July 2015 to June 2022 from P1.3810 to P1.3522 per kwh. This is already reflected in the customers’ August bill as lower Distribution, Supply and Metering charges.
Prior to this adjustment, Meralco’s distribution charges were unchanged since the reduction in July 2015.
The transmission charge for residential customers had an increase by P0.0235 per kwh. Taxes and other charges, meanwhile, registered a net decrease of P0.0018 per kwh.
The collection of P0.0025 per kwh representing the Universal Charge environmental Charge remains suspended as ordered by the ERC.
Pass-through charges from generation and transmission are paid to the power suppliers and the system operator, respectively, while taxes, universal charges, and Feed-in Tariff Allowance (Fit-all) are all remitted to the government.
Meanwhile, oil firms announced more than P2 per liter slash in the prices of petroleum products starting Tuesday morning.
In separate advisories, they said gasoline prices would go down by P2.10 per liter, diesel by P2.20 per liter, and kerosene by P2.55 per liter. This is the 6th consecutive week of price rollback for diesel and kerosene.
Seaoil, PTT, Phoenix, Shell, Caltex, Unioil, Total, Petron said they will adjust their prices at 6 a.m. of Tuesday, August 9. Cleanfuel, meanwhile, will implement the price rollback at 8:01 a.m.
Last week, oil companies implemented a price decrease in diesel by P0.60 per liter and kerosene by P0.75 per liter. On the opposite, gasoline has increased by P0.75 per liter.
These resulted to the year-to-date total adjustments to stand at a net increase of P19.65/liter for gasoline, P32.35/liter for diesel and P27.30/ liter for kerosene.
Oil firms adjust their prices every week to reflect movements in the world oil market.
The local oil industry uses Mean of Platts Singapore (MOPS), which is the daily average of all trading transactions between buyer and seller of petroleum products as assessed and summarized by Standard and Poor’s Platts, a Singapore-based market wire service.
MOPS gasoline, diesel, and kerosene have been going down lately.
Crude prices went down as Covid-19 cases increased in China amid no relaxation in restrictions, coupled with a counter seasonal build in gasoline inventories in the US.