Meralco cuts rates by 5 centavos per kwh this month

MANILA, Philippines - Electricity rates will go down by roughly P10 this month on the back of a 5-centavo per kilowatt-hour reduction for a typical household consuming 200 kwh, the Manila Electric Co. (Meralco) said yesterday.

This is due to lower ancillary service component of the transmission charge, lower system loss and fewer customers who availed of the lifeline subsidy, which in turn offset a slight increase in the generation charge for a month.

The generation charge in May rose by only P0.07 per kwh to P5.97 per kwh from P5.90 per kwh in April.

This was despite a P6.70 per kwh increase in charges from the Wholesale Electricity Spot Market (WESM), the country’s trading floor for electricity.

Meralco reduced the power it purchased from the WESM for the month of May and instead signed interim power supply agreements with power producers such as Toledo Power and Panay Power.

“Our preparations to meet increasing demand this summer have allowed us to reduce the share of WESM purchases from 3.9 percent in the March supply month down to 3.4 percent in April,” said Alfredo Panlilio, Meralco’s senior vice president for customer retail services and corporate communications.

Panlilio said that deliveries from both Toledo Power and Panay Power commenced on April 3 and helped reduce requirements from the WESM.

Meralco also fast-tracked a sub-transmission line project that allowed Therma Mobile to increase its available capacity to 200 MW from 150 MW beginning April 23, which further minimized the volume of power needed from the WESM.

The reduced WESM share was also partly due to the earlier-than-scheduled resumption of operations of Ilijan 1 natural gas power plant after it went on maintenance outage, Meralco also said in its advisory.

Meanwhile, the cost of power from independent power producers (IPPs) went down by P0.13 per kwh. This offset a P0.07 per kwh increase in the average rate of energy from power supply agreements (PSAs), which still remained the source of power with the lowest cost.

Meralco said PSAs and IPPs accounted for 56.1 percent and 40.4 percent of total energy requirements, respectively.

Aside from the cost of power, other components in consumers’ electricity bills also went down. For instance, a 200 kwh household will see its transmission charge go down by P0.08 per kwh due to lower ancillary charges.

There was also a cumulative reduction of P0.04 per kwh in subsidies and the system loss charge, mainly due to a decline in system loss percentage to 6.5 percent in May from 6.6 percent last month.

Despite the reduction in electricity rates for the month of May, Meralco urged customers to practice energy efficiency.

“Some examples of energy efficient practices include keeping the motors of electric fans clean. When using air conditioners, it is also advisable to set the thermostat to a comfortable level instead of the coolest level to save on electricity,” Meralco said.

ERC approved price cap

Meanwhile, the Energy Regulatory Commission (ERC) approved the secondary price cap at the WESM to cushion electricity consumers from price spikes this summer.

The price cap is the highest offer that sellers can give when they sell their electricity to the market.

Power suppliers in the market with the lowest price get to supply the requirements of distribution utilities, but the last offer is the one that sets the price for which they will be paid.

In a resolution dated May 6, the ERC said the price cap would be imposed if the average WESM offers submitted by power generators would breach P8.186 per kwh over a 72-hour period.