Meralco bills to go down by 19¢/kWh this month

CUSTOMERS OF Manila Electric Co. (Meralco) can expect their power bills to go down this month as electricity rates fell by 19 centavos per kilowatt-hour (kWh) due largely to the lower cost of coal and the stable power supply in December last year.

Households consuming 200 kWh monthly will see a reduction of P38.81 in their power bills, while those that use 300 kWh will save P58.22 this

month, said Lawrence S. Fernandez, Meralco assistant vice president and head of utility economics.

Households using 400 kWh and 500 kWh monthly can expect their power bills to go down by P76.62 and P97.03, respectively.

This will be the third straight month that power rates have gone down, with the generation charge, accounting for roughly 60 percent of the electricity bill, currently at its lowest level since October 2013.

Meralco has more than 5.3 million customers in its franchise area that covers 31 cities and 80 municipalities in Metro Manila, the entire provinces of Bulacan, Rizal and Cavite; and parts of the provinces of Laguna, Quezon, Batangas and Pampanga.

Difficult to sustain

The franchise area, home to at least 24.7 million people, accounts for about 50 percent of the country’s gross domestic product.

Meralco said the series of lower generation charges over the past few months may be difficult to sustain, especially as warmer temperatures set in while the Malampaya gas facility is shut down sometime in March and April.

In a statement issued on Wednesday, Meralco said the generation charge for January decreased 22 centavos to P4.72 per kWh from P4.94 per kWh last month.

“The reduction in the generation charge was mainly driven by lower charges from the plants under the power supply agreements (PSAs), which registered a reduction of 73 centavos per kWh due to the normal operations of the power plants during the December supply month and the lower cost of fuel. Coal prices of some suppliers went down by almost $2 per metric ton,” Meralco said.

The drop in coal prices coincided with the sharp decline in global crude oil prices as a re- sult of additional supply generated by fracking in the United States and weakening demand in Europe and China.

Only the changes in coal prices have significant impact on power rates this month, while any changes in bunker fuel prices have negligible impact since the volume of electricity produced from this fuel remains marginal, according to Fernandez.

Any changes in the prices of natural gas from the Malampaya will be reflected in the next billing month as these are often adjusted on a quarterly basis, he said.

Thirty-seven percent of the electricity used by Meralco came from coal facilities, while 59 percent was from natural gas-fired plants. The rest came from various sources, including renewable energy and oil-based facilities

The lower PSA charges, the distribution utility added, more than offset higher charges from independent power producers (IPPs) and the Wholesale Electricity Spot Market (WESM), whose cost of power rose by 24 centavos and P1.68 per kWh, respectively.

Meralco said the higher WESM charges were primarily due to the additional payment and compensation to power generators affected by the administered and secondary price cap implementation for the February to July supply months last year.

For December, Meralco drew 52 percent of its electricity requirements from the PSAs; 45 percent from the IPPs; and only 3 percent from WESM.

Contributing to the overall downward adjustment in power bills of households was the 2.6-centavo decrease in taxes and the 1.1-centavo cumulative decline in the system loss charge and subsidies. Transmission charges, however, rose 6.2 centavos per kWh.

Pass-through charges

Meralco reiterated that it was not earning from the passthrough charges, such as the generation and transmission charges.

Payment for the generation charge goes to power suppliers, such as the plants selling to Meralco through the WESM and under the PSAs, as well as the IPPs.

Payment for the transmission charge goes to National Grid Corp. of the Philippines.

Of the total bill, only the distribution, supply, and metering charges accrue to Meralco.

Sharp contrast

The decrease in rates is in sharp contrast to the surge in Meralco rates last year as a result of the shutdown of the Malampaya gas pipeline for maintenance from Nov. 11 to Dec. 10 in 2013.

The surge in electricity rates generated a storm of protests, a congressional probe and a Supreme Court order reining in the increases.

A number of power generation plants also shut down during Malampaya’s maintenance, creating a 45-percent shortfall in the average 6,000 megawatts that Meralco supplies to customers.

The shortfall forced Meralco to buy more expensive supply from the WESM and to pass on the cost to customers.

The shutdown of the pipeline also prompted plants that use the cheaper natural gas from Malampaya and supply power to Meralco to use more expensive fuel.

Lawmakers and the Department of Energy have accused industry players of collusion that led to the huge rate increase in Meralco’s generation charge. Meralco and the power suppliers denied the accusations.

Inverter type appliances

Meralco urged people planning to buy new appliances to consider inverter types, especially for washing machines, air-conditioners and refrigerators, so that they could further save on energy costs.

In the case of refrigerators, consumers can save up to P211 a month with the inverter type compared with the conventional refrigerator, Meralco said.

Though inverter types are more expensive, in the long run, customers can save on power bills because they are more energy efficient.