Lower power rates expected this month

MANILA, Philippines – Even as the temperature rises, Manila Electric Co. (Meralco) customers will see lower electric bills this month due to the downward adjustment in generation charge amid ample power supply.

Meralco announced yesterday that the overall rate for its residential customers this March would go down by P0.19 per kilowatt-hour (kWh).

Electricity bills will be reduced by P38 for households consuming 200 kWh, P57 for 300 kWh, P76 for 400 kWh and P95 for 500 kWh.

This month’s overall rate of P8.63 per kWh is lower by P1.79 per kWh compared to March 2015’s P10.42 per kWh.

Meralco attributed the decrease in overall rates to the generation charge, which declined by P0.17 per kWh from last month.

This reduction in generation charge is due to the higher dispatch of power plants and, to a lesser extent, the slightly lower fuel cost.

Usually, power rates tend to increase as summer approaches, especially now that the country is experiencing El Niño.

However, power supply situation plays an important role in electricity prices, according to Meralco senior vice president and head of utility economics Larry Fernandez.

“Demand for power tends to increase as summer approaches, peaking in May. This summer, demand may grow at above average rates because of El Niño and election-related activities. Higher demand tends to put upward pressure on prices, especially in the spot market,” Fernandez said.

“However, the final impact will also depend on the supply situation. If there is enough supply and reserves, this can help mitigate the pressure on prices,” he added.

The power distributor said plants under the Power Supply Agreements (PSAs) registered a reduction of P0.26 per kWh after the overall average dispatch level went up to 72 percent in February from 66 percent in January.

Charges from the independent power producers (IPPs) also decreased by P0.17 per kWh.

The dispatch of First Gas plants Sta. Rita and San Lorenzo went up from 75 percent to 80 percent and 80 percent to 89 percent, respectively.

Charges from the Wholesale Electricity Spot Market (WESM) rose P0.63 per kWh, as market prices began to reflect the higher system demand.

But since there was enough supply from generating plants, the WESM share in Meralco’s power requirements fell to 5.3 percent from 6.1 percent.

Meanwhile, transmission charge slightly increased by P0.03 per kWh as higher ancillary charges more than offset a reduction in the power delivery service charge of the National Grid Corp. of the Philippines.

Following the decline in generation charge, taxes decreased by P0.02 per kWh, while other charges went down by P0.03 per kWh, primarily driven by the reduction in system loss charges.