Meralco power rates down in June

MANILA, Philippines – For June, consumers will see a decrease of P0.58 ($0.013) per kilowatt hour (kWh) – or a reduction in their overall electric bill of P116 ($2.56) for households consuming 200 kWh – the Manila Electric Company (Meralco) said on Monday, June 8.

This will be the 4th downward adjustment for the year, Meralco said. Generation charge, the biggest component of a Meralco bill, is down anew by P0.36 ($0.0080) per kWh from P4.81 ($0.11) in May to P4.45 ($0.099) this month – the lowest level since October 2010.

The P0.58 ($0.013) per kWh reduction can be attributed to a P0.36 ($0.0080) per kWh drop in generation charge; P0.09 ($0.0020) decline in transmission charge; P0.06 ($0.0013) decrease in taxes; and P0.07 ($0.0015) drop in other charges.

Meralco’s distribution charge, meanwhile, has not registered any adjustment or change and has remained at the same level for almost a year since July 2014.

The reduction was mainly driven by lower charges due to lower fuel costs, and higher dispatch from plants under the Independent Power Producers (IPPs) and Power Supply Agreements (PSAs).

IPPs and PSAs registered reductions of P0.67 ($0.015) and P0.59 ($0.014) per kWh, respectively.

The share of IPPs and PSAs to Meralco’s total power requirements stood at 45% and 48%, respectively.

Offset

The reductions in IPP and PSA rates more than offset a P2.85 ($0.063) per kWh increase in charges from the Wholesale Electricity Spot Market (WESM), a venue where electricity is traded (bought and sold) prior to supplying it to the destination grid of the end customer (individual customer or commercial).

WESM exhibited noticeable price spikes, particularly starting the week of May 11, as a number of plants went on forced outages or reduced their output. The high WESM clearing prices, which at times approached P30 ($0.66) per kWh, were sustained for the rest of the supply month. 

The Philippine Electricity Market Corporation (PEMC), the operator of the WESM, said the secondary price cap was not triggered in May. The price cap is the highest offer that sellers can give when selling their electricity to the market. Power suppliers in the market with the lowest price get to supply the requirements of distribution utilities. The last offer though is the one that sets the price for which they will be paid.

The share of WESM to Meralco’s total power requirements stood at 7%.

Meralco has consistently reiterated that it does not earn from the generation and transmission charges as these are pass-through costs.

Payment for the generation charge goes to the power suppliers. Payment for the transmission charge goes to the National Grid Corporation of the Philippines. Of the total bill, only the distribution charge accrues to Meralco. – Rappler.com