Lower Meralco rates this month

MANILA, Philippines — Rates of Manila Electric Co. (Meralco) decreased for the second straight month this February, largely due to lower charges from Independent Power Producers (IPPs) and the wholesale electricity spot market (WESM).

At a virtual briefing yesterday, Meralco vice president and head of corporate communications Joe Zaldarriaga said the overall rate for this month declined by P0.1185 per kilowatt-hour (kwh) from P9.7027 per kwh to P9.5842 per kwh.

With the P0.0746 per kwh reduction in January, he said Meralco rates have gone down by around P0.20 per kwh in two months.

The February rate reduction is equivalent to a decrease of around P24 in the total bill of residential customers consuming 200 kwh, for a cumulative bill reduction of P39 since the start of the year.

Zaldarriaga attributed the decline to decrease in generation charge by P0.2305 per kwh from P5.4262 per kwh to P5.1957 per kwh.

The generation charge – the bill’s largest component, went down due to lower IPPs and WESM rates, which more than offset an increase in the rate from Power Supply Agreements (PSAs).

Charges from the IPPs went down by P0.3395 per kwh due to higher plant dispatch of Quezon Power and First Gas-Sta. Rita.

“Quezon Power resumed normal operations in the January supply month after experiencing some outages and deration in December, while First Gas-Sta. Rita’s output increased following the completion of the scheduled maintenance outage of Module 10 in December,” Zaldarriaga said.

The IPP charges also reflected a reimbursement from Shell Philippines Exploration B.V. (SPEX), the operator of the Malampaya gas facility, to First Gas covering a portion of incremental fuel cost incurred in relation to the use of liquid fuel during unplanned Malampaya gas supply restrictions.

“These were able to more than offset the increase in Malampaya natural gas prices resulting from its quarterly repricing and an increase in coal prices,” Zaldarriaga said.

Meanwhile, WESM charges also decreased by P13.1277 per kwh due to the significant reduction in Meralco’s WESM purchases, which mitigated the impact of higher spot market prices during the January supply month.

Zaldarriaga said if Meralco had purchased more electricity from WESM, it would have put upward pressure on the generation charge.

“Despite lower demand because of cooler weather, the Luzon grid was placed on Yellow Alert on Jan. 10 and 11 due to forced plant outages. The tight supply condition led to sustained high WESM prices, which triggered the imposition of the secondary price cap 28.37 percent of the time,” he said.

On the other hand, PSA rate increased by P0.1631 per kwh, owing to lower demand that led to lower excess energy deliveries, which are priced at a discount, from AC Energy, San Miguel Energy Corp. (Sual) and South Premiere Power Corp. (Ilijan).

The lower average PSA dispatch, with San Buenaventura on scheduled maintenance until Jan. 19, also contributed to the rate increase.

IPPs, PSAs, and WESM provided 52.2 percent, 47.4 percent, and 0.4 percent of Meralco’s energy requirement, respectively.

In the case of other charges, transmission charge for residential customers increased by P0.0454 per kwh due to higher Ancillary Service and Power Delivery Service charges.

Taxes and other charges also registered a net increase of P0.0666 per kwh, mainly resulting from the resumption of local franchise tax recovery, in accordance with Energy Regulatory Commission (ERC) rules, and higher effective value-added tax rates this month.

Collection of the Universal Charge-Environmental Charge amounting to P0.0025 per kwh remains suspended as directed by the ERC.

Meralco’s distribution, supply and metering charges have remained unchanged for 79 months, after registering a reduction back in July 2015.