Lower generation charge brings down Feb power rates–Meralco

ELECTRICITY rates in February declined to P8.8623 per kilowatt-hour from P9.4523 per kWh, mainly due to lower generation charge.

The P0.59 decrease will result in a P118 reduction for household consumers with an average consumption of 200 kWh, the Manila Electric Co. (Meralco) said Thursday.

The rate is also lower in the same period 10 years ago at P9.0331 per kWh.

“The reduction is mainly due to a lower generation charge after the implementation of new power- supply agreements [PSAs] starting last December 26 last year,” it said.

These PSAs were secured after a successful competitive selection process (CSP) under the guidance of the Department of Energy (DOE) and the expeditious provisional approval of the Energy Regulatory Commission (ERC).

From P4.9039 per kWh last month, the generation charge for February decreased to P4.5090 per kWh, a reduction of P0.3949 per kWh.

Generation charge is a major component of an electric bill.

The new baseload PSAs— with San Miguel Energy Corp., South Premiere Power Corp., and AC Energy—registered a significantly lower generation cost of P4.0372 per-kWh average and contributed 21 percent to

Meralco’s supply requirements.

Meanwhile, charges from the Wholesale Electricity Spot Market also decreased this month, driven by lower power demand and improved supply conditions in the Luzon grid. The WESM rate for February is P3.0529 per kWh. The share of WESM to Meralco’s supply needs increased to 23 percent.

These offset the cost of power from Meralco’s independent power producers (IPPs) and old PSAs, which increased by P0.7429 per kWh to P5.2920 per kWh, mainly due to lower average plant dispatch resulting from the scheduled outage of Quezon Power and First NatGas-San Gabriel from January 17 to 25 and January 4 to 23, respectively.

The IPPs and old PSAs accounted for 56 percent of total supply.

Meanwhile, taxes and other charges registered a decrease of P0.2839 per kWh.

The feed-in-tariff allowance went down by P0.1731 per kWh after the ERC approved a lower FiT-All rate of P0.0495 per kWh, as compared with the previous subsidy of P0.2226 per kWh.

Contributing to the decline was the P0.0543 per-kWh reduction in the Universal Charge after the Power Sector Assets and Liabilities Management Corp. said that it completed the collection of National Power Corp.’s stranded contract cost recovery.

These cushioned the impact of a P0.0888 per-kWh increase in the transmission charge for residential customers, which was a result of higher National Grid Corp. of the Philippines (NGCP) ancillary service charges.

Meralco’s distribution, supply and metering charges, meanwhile, have remained unchanged for 55 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 UC and the FiT-All, are remitted to the government.