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Meralco announces third consecutive month of electricity rate reduction

Power retailer Manila Electric Co. on Monday announced the third consecutive month of power rate reduction, amounting to P0.1068 per kilowatt-hour in July.

This would mean a decrease of around P21 in the monthly bill of a typical household consuming 200 kilowatt-hours. 

Meralco said in a statement overall electricity rates decreased to P9.9850 per kWh in July from last month’s P10.0918 per kWh. 

“The third straight month of electricity rate decrease represents a total downward adjustment of around P0.57 per kWh since May 2019,” the country’s biggest power distributor said.

The generation charge lightly went up to P5.4227 per kWh from P5.4158 per kWh last month.

Meralco attributed the slight generation charge increase to higher charges from the Wholesale Electricity Spot Market.  This was mostly offset by the lower charges of independent power producers and stable charges of power supply agreements.

Charges at WESM, the country’s trading floor of electricity, increased by P1.8794 per kWh due to tight supply condition in the Luzon grid. Demand for power in the grid peaked at 11,344 MW in June. 

National Grid Corporation of the Philippines raised the red alert status for the Luzon grid five times and declared 13 instances of yellow alerts in June. Meralco sourced 8.1 percent of its power requirements last month. 

Cost of power from IPPs declined by P0.2239 per kWh largely due to peso appreciation. About 97 of IPP charges are dollar-denominated. IPPs supplied 41.4 percent of Meralco’s power supply in June.

Meralco said the cost of power from PSAs remained stable with a slight increase of P0.0414 per kWh. PSAs supplied about 50.5 percent of Meralco’s power needs.

“The overall reduction this month was mainly brought about by a lower transmission charge for residential customers, which decreased by P0.0788 per kWh, primarily due to lower ancillary service charges,” the company said.

Taxes and other charges also decreased by P0.0349 per kWh which included a reduction of P0.0731 per kWh, in compliance with the Energy Regulatory Commission’s directive to implement a one-time decrease in rates for reset cost adjustment.

This month’s rate, however, includes an increase in the universal charge-stranded contract cost amounting to P0.0543 per kWh to be recovered for 12 months as approved by the ERC.

Meralco’s distribution, supply, and metering charges were unchanged.

Meralco said it was not earning 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 National Grid Corp. of the Philippines. Taxes and other public policy charges like the feed-in tariff-allowance rate are remitted to the government.

Topics: Manila Electric Co. , power rate reduction , Wholesale Electricity Spot Market , National Grid Corp. of the Philippines
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