Power rates to go down due to lower generation charge

MANILA, Philippines - Consumers will see a reduction in their December electricity bills of P38 for the typical household consuming 200 kilowatt-hours because of lower generation charge of P4.94 per kwh, in stark contrast to the P9.10 per kwh slapped on consumers in December last year, the Manila Electric Co. (Meralco) said yesterday.

In an advisory, power distributor Meralco said the December generation charge went down by P0.17 per kwh from the November figure due to lower prices at the electricity spot market, resulting in a P0.19 per kwh reduction or P38 decrease in the overall electricity bill for the month.

The generation charge, which accounts for 60 percent of total electricity cost, is the cost of power sourced by Meralco the preceding supply month.

Meralco sources its power from the Wholesale Electricity Spot Market (WESM), the country’s trading floor for electricity, power supply agreements (PSAs) and independent power producers (IPPs).

The supply situation in Luzon also improved after Unit 1 of Team Energy’s Sual coal plant in Pangasinan with a capacity of 647 MW came back online after a month-long maintenance shutdown in October 2014, Meralco said.

This month’s generation charge of P4.94 per kwh is lower by P4.16 compared to the December 2013 generation charge of P9.10 per kwh slapped on consumers, but halted by the Supreme Court through a temporary restraining order. The High Court has yet to issue its decision on the matter.

“At P4.94 per kwh, this is the first time since October 2013 that the generation charge fell below P5 per kwh,” Meralco senior vice president and head of utility economics Lawrence Fernandez said yesterday.

“Combining last month’s and this month’s adjustments, overall rates are down by P0.60 per kwh since October 2014,” Meralco said in its advisory.

The power firm also said the lower WESM charges offset the slight P0.10 per kwh and P0.03 per kwh increases in the average rates of IPPs and power plants covered by PSAs, respectively.

In terms of share to Meralco’s total power requirements for the November supply month, WESM, IPPs and PSAs accounted for 4 percent, 43 percent and 53 percent, respectively.

Contributing also to the overall downward adjustment in the bills to households is the P0.014 decrease in taxes and P0.023 cumulative decrease in the system loss charge and subsidies.