Meralco rates down in July

MANILA, Philippines — Households in areas serviced by the Manila Electric Co. (Meralco) will have lower electricity bills this month.

Meralco said the overall rate for a typical household this July is P0.7213 per kilowatt hour lower this month, at P11.1899 per kwh than the previous month’s P11.9112 per kwh.

The downward adjustment is equivalent to a decrease of around P144 in the total electricity bill of residential customers consuming 200 kwh, P216 for those consuming 300 kwh, P289 for 400 kwh and P361 for 500 kwh.

“The main driver is the reduction in generation charge,” Meralco vice president and head of corporate communications Joe Zaldarriaga said on July 10.

Generation charge, the bill’s largest component, has declined for the second straight month, by P0.6436 per kwh to P6.6066 per kwh this month from P7.2502 per kwh in June.

Meralco said charges from the Wholesale Electricity Spot Market (WESM) went down by P2.6597 per kwh as demand decreased amid the onset of the rainy season.

Charges from power supply agreements (PSA) and independent power producers (IPP) also decreased by P0.3915 per kwh and P0.4658 per kwh, respectively, mainly due to lower coal prices and peso appreciation.

PSAs accounted for 48 percent of Meralco’s total energy requirement for the June supply month, followed by IPPs at 37 percent and WESM at 15 percent.

Meanwhile, Meralco said transmission and other charges, which include taxes and subsidies, likewise registered a net reduction of P0.0777 per kwh.

The distribution charge, on the other hand, has not moved since the P0.0360 per kwh reduction for a typical residential customer beginning August 2022.

Meralco reiterated that pass-through charges for generation and transmission are paid by its power suppliers and the grid operator, respectively, while taxes and universal charges are all remitted to the government.

“So for August, we see two factors that can move the August generation charge. The first is demand went up this July, especially last week. As reported in Luzon grid, peak demand last week was even higher than during the summer this year. But we haven’t seen spot market prices being pushed upward, so hopefully that continues,” Meralco vice president and head of utility economics department Lawrence Fernandez said.

“Second, global crude oil prices have been trending downwards, and this will push down also the Malampaya gas price. So there is a repricing in the Malampaya gas price for the first half of 2023, which will be reflected in the August generation charge so we’re hoping that that can influence the August generation charge,” he said.

Meralco, however, said it cannot see yet the potential impact of El Niño on rates in the coming months.

“It’s hard to predict since there are so many factors in play like fuel, foreign exchange, dispatch. So these are the things that you have to consider plus temperature levels,” Zaldarriaga said.

“What we also need to see is what the impact of the El Niño will be compared to the March to June summer months. We don’t know that yet. Will it be the same? I don’t think the temperatures or the heat index will be higher than the one we experienced in May. But of course, we will still need the data for that. But there are factors in play that may still have the same effect as we have this month of July. So we’re still hoping for the best,” he said.