Electricity rates to decline in October — Meralco

Meralco meters. (INQUIRER FILE PHOTO)

MANILA — Electricity bills of Meralco clients will decline this month due to downward adjustments in charges for power generation and transmission, according to the country’s largest electricity distributor.

In a press statement on Thursday, Meralco announced a reduction in rate for a typical household this October by P0.1216 per kilowatthour (kWh) to P8.34 per kWh.

“This translates to a reduction of around P24 in the electricity bill of a household with monthly consumption of 200 kWh,” the power utility said.

This month’s overall rate is less by P0.08 per kWh compared to October 2015’s P8.42 per kWh. This is also the third straight month of reduction in the overall residential rate.

Meralco noted that the decrease in the generation charge this month would be P0.0501 per kWh less than last September’s P3.9439 per kWh. At P3.8938 per kWh, the generation charge is P0.1017 per kWh less compared to October 2015’s P3.9955 per kWh.

“The decrease resulted mainly from lower charges from the Wholesale Electricity Spot Market (WESM) due to lower demand in September as compared to August,” it explained. “This offsets increases in Independent Power Producer (IPP) and Power Supply Agreement (PSA) costs brought about by higher coal prices and the weaker peso against US dollar, from P46.58 to P48.50. Peso depreciation has an upward impact on the peso conversion of the dollar charges of the PSA and IPP plants.”

The company also pointed out that overall charges from the WESM decreased by P1.4747 per kWh. Spot prices softened as peak demand in the Luzon grid was down by around 300 megawatts (MW) in September vis-à-vis August. The share of WESM purchases to Meralco’s total requirements went down from 20.6 percent to 16.1 percent.

Meanwhile, the cost of power sourced from plants under PSAs increased by P0.3257 per kWh primarily due to higher fuel costs. Coal price in the region continued to increase from $52.85 per metric ton (MT) in June 2016 to $67.41/MT in August 2016. The share of PSAs stood at 47.4 percent.

Cost of power from IPPs also increased by P0.1671 per kWh. This was mainly because of the weaker peso against US dollar. The share of the IPPs to Meralco’s total requirements for the September supply month was at 36.3 percent.

Meralco said that the decline in October rates was also attributable to a decrease in the transmission charge by P0.0558 per kWh, mainly due to the reduction in ancillary charges of the National Grid Corporation of the Philippines (NGCP). Taxes and other charges also decreased by a combined amount of around P0.0157 per kWh.

Meralco’s distribution, supply, and metering charges, meanwhile, have remained unchanged for 15 months, after these registered reductions in July 2015. Meralco 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.

Meralco said that the drops in rates since 2012 narrowed the gap between its own electricity rates and those of other countries.  SFM