Meralco sees lower power rates next month

MANILA, Philippines - Electricity rates will likely go down in February as a result of the continuing decline in oil prices, an official of the Manila Electric Co. (Meralco), the country’s biggest power distributor, said yesterday.

Meralco sources around 40 to 60 percent of its supply from the Malampaya natural gas field, the price of which is based on a basket of indexes including oil prices.

Oil companies rolled back gasoline prices 29 times since Jan. 1, 2014 or a total reduction of P23.80. Diesel prices were slashed 35 times since last year, translating to a total price cut of P24.05.

Prices of kerosene went down 37 times since last year, bringing the total price cut at P24.20.

“The new natural gas price will be reflected in the generators’ bills to Meralco for the January supply month, which would be an input to the computation of the generation charge for the February bills to customers,” Lawrence Fernandez, head of Meralco’s utility economics, said.

Fernandez explained that the natural gas price for January to March 2015 would be based partly on the average oil prices for the six-month period of July-December 2014.

The natural gas price for October to December 2014 was partly based on average oil prices for the six-month period of April to September 2014, he noted.

“We will need to await the actual billings of the natural gas-fired plants to Meralco to know the actual extent of the change in the natural gas price,” Fernandez said.

What is clear, he said, is that based on the December 2014 supply month, natural gas-fired power plants have accounted for around 60 percent of the energy supply of the power distributor, while coal-fired plants accounted for around 37 percent. 

Fernandez said the remaining three percent is a mix of oil-based energy and those sourced from the Wholesale Electricity Spot Market, the country’s trading floor for electricity.

For the month of January, consumers saw a P38 reduction in their electricity bills due to lower cost of coal. Rates went down to P0.19 per kilowatt-hour for a typical household consuming 200 kilowatt-hours.

Meralco’s generation charge – the biggest portion of the bill – accounting for roughly 60 percent, has gone down by P0.22 from P4.94 last December to P4.72 this month, the lowest generation rate in 15 months.