Meralco cuts rates for 4th straight month

The Manila Electric Co. (Meralco) yesterday announced its rates would go down for the fourth straight month this August amid a sufficient supply due to lower demand, stronger peso and lower oil prices.

At a virtual press briefing yesterday, Meralco spokesman Joe Zaldarriaga said the overall rate for a typical household decreased by P0.2055 per kilowatt-hour, which means a reduction of around P41 in the total bill of a residential customer consuming 200 kwh, P62 for a 300-kwh consumer, P82 for a 400-kwh user and P103 for a 500-kwh household.

The overall rate decrease is attributed to the lower generation charge, which has gone down for five straight months with a total rate decrease of more than one peso per kwh since the start of the year, he also said.

Zaldarriaga noted that this month’s overall rate is significantly lower than that of August last year, which was P9.5674 per kwh, and the lowest in nearly three years, since September 2017.

He said the generation charge decreased by P0.2103 per kwh from P4.3344 per kwh to P4.1241 per kwh mainly because of the reduction in charges from the wholesale electricity spot market (WESM) and the independent power producers (IPPs).

WESM charges were P1.12 per kwh lower this month due to improved supply situation in the Luzon grid with lower average plant capacity on outage. There were also no yellow alert notices in July versus one in June.

The share of WESM to Meralco’s supply needs is 15.5 percent.

The cost of power from the IPPs decreased by P0.3284 per kwh due to lower natural gas prices as a result of quarterly repricing.

“The price of natural gas from Malampaya is indexed to international crude oil prices. The significant reduction in crude oil prices in the first half of the year was reflected in the Malampaya natural gas price this month. Peso appreciation also contributed to this month’s reduction in IPP rates,” the company said.

Meanwhile, purchases from PSAs inched up by P0.2722 per kwh due to lower average plant dispatch and lower force majeure (FM) claims this month as compared with the previous month.

Meralco said it continued to invoke the FM provision in its PSA with First Gen Hydro Power Corp. because of the reduced power demand in its service area during the community quarantine period. This August, the FM claim totaled about P82 million, equivalent to customer savings of P0.0285 per kwh in the generation charge.

For the past five months, the savings from FM claims totaled around P1.9 billion.

IPPs and PSAs accounted for 33.9 percent and 50.6 percent of Meralco’s total supply, respectively.

In terms of other charges, the transmission charge for residential customers registered a slight reduction of P0.0081 per kwh due to lower ancillary service charges. This more than offset the P0.0129 per kwh net increase in taxes and other charges.

Collection of the universal charge-environmental charge amounting to P0.0025 per kwh remains suspended, as directed by the ERC.

Meralco’s distribution, supply and metering charges, meanwhile, have remained unchanged for 61 months, after these registered reductions in July 2015.