Meralco sees reduction in generation charges this month

MANILA, Philippines - To appease the public from an impending power rate hike related to its performance-based rate (PBR) mechanism, the Manila Electric Co. (Meralco) said yesterday it expects a reduction in its generation charges this month.

In a statement, Meralco said it sees a drop in the generation cost of its independent power producers (IPPs).

Meralco said the IPP rates dropped by 18.20 centavos per kilowatthout (kwh) on the average, with Quezon Power Philippines Ltd. (QPPL) registering the biggest reduction of almost P1 per kwh.

Both the Sta. Rita and San Lorenzo power plants likewise decreased by 3.23 centavos and 4.72 centavos per kwh, respectively.

The reduction in the IPP rates is largely due to the higher capacity factor for all three IPPs, resulting to lower fixed cost per kwh.

For the month of August, the capacity factor for QPPL, Sta. Rita and San Lorenzo reached 86 percent, 91.5 percent and 94.9 percent, respectively.

Meralco has always emphasized that if the IPP plants reach higher dispatch levels, this will result in lower power rates charged by these plants.

The IPPS have consistently been Meralco’s cheapest source of electricity over the past four months.

The wholesale electricity spot market (WESM), meanwhile, is also seen to register lower rates in August which will impact on the September bills of customers.

Customers of Meralco will have to pay a 17-19 centavos per kwh increase due to an P18-billion unpaid cost under the PBR scheme.

A newly-formed consumer advocacy group, Gov’t Watch, which replaced the Consumer and Oil Price Watch being headed by businessman Raul T. Concepcion, had warned about the rising electricity rates over the past months.

It would be noted that distribution utilities like Meralco are allowed a maximum allowable revenue and a price cap which would be adjusted on an annual basis.

Meralco has around 4.8 million customers in its franchise area which includes Metro Manila and nearby provinces.

To date, Meralco has a pending application to increase its rates by P1.71 per kwh for 2012, P1.77 per kwh for 2013, P1.85 per kwh for 2014, and P1.90 per kwh for 2015.