Electricity rates down in June

MANILA, Philippines — Households can expect lower electricity bills this month as the Manila Electric Co. (Meralco) is set to reduce its rates by P0.1252 per kilowatt-hour (kwh) on account of lower generation and transmission charges.

This was the second consecutive month Meralco cut its rates. The adjustment will bring down the overall rate from P10.0041 per kwh last month to P9.8789 per kwh this month.

This is equivalent to a decrease of P25.04 in the bill of a residential customer consuming 200 kwh, P37.56 for 300 kwh, P50.08 for 400 kwh and P62.60 for 500 kwh.

Meralco attributed the decline to the P0.1556 per kwh decrease in generation and transmission charges, which more than offset a P0.0733 per kwh increase in the Feed-In Tariff Allowance (FIT-All).

FIT-All is a uniform charge billed to all on-grid electricity consumers, reflected as a separate component in their monthly electricity bills, representing payments to renewable energy developers under the FIT system.

The system allows the granting of perks to power developers for a period of 20 years to encourage them to invest in the more expensive renewable sector.

Meralco said the generation charge for this month amounted to P4.9828 per kwh, down by P0.0695 per kwh from P5.0523 per kwh last month. The decline was largely due to lower Power Supply Agreements (PSA) cost.

The PSA cost decreased by P0.4420 per kwh because of higher dispatch of Pagbilao Unit 1 and Ilijan Unit 1 as both returned to normal operations after undergoing scheduled maintenance.

The decline in PSA cost tempered the increase in Wholesale Electricity Spot Market (WESM) and Independent Power Producers (IPPs) charges, which rose P0.1954 per kwh and P0.2266 per kwh, respectively.

“As demand for power in the Luzon grid grew by about 239 MW, charges from the WESM increased due to higher effective rates of line rentals. Higher IPP charges, on the other hand, were driven by the weakening of the peso against the US dollar. Around 96 percent of IPP charges are dollar-denominated,” Meralco said.

The share of PSA purchases to Meralco’s total requirement this month was 45 percent, while WESM was at 15 percent and IPP purchases at 40 percent.

Another contributor to the lower overall rate was the P0.0861 per kwh decrease in transmission charge to residential customers due to lower power delivery and ancillary service charges of the National Grid Corp. of the Philippines (NGCP).

With the lower generation and transmission charges, taxes and other charges also went down by P0.0429 per kwh during the period.

The lower charges were more than enough to offset the increase in the FIT-All rate to P0.2563 per kwh this month.

Meanwhile, Meralco said its distribution, supply and metering charges have remained unchanged for 35 months, after declining in July 2015.

The power distributor said it does not earn from 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. Taxes and other public policy charges like the FIT-All rate are remitted to the government.