The Manila Electric Company (MERALCO) announced recently that overall electricity rates decreased to P10.2866 per kWh this month from last month’s P10.5594 per kWh.
The downward adjustment of P0.2728 per kWh will mean a decrease of around P55 in the total bill of a typical household consuming 200kWh.
From P5.6322 per kWh last month, generation charge for May went down to P5.5508 per kWh, a decrease of P0.0814 per kWh.
The generation charge decrease is primarily due to lower charges from the Independent Power Producers (IPPs) and Power Supply Agreements (PSAs).
Cost of power from IPPs and PSAs decreased by P0.7544 per kWh and P0.5143 per kWh, respectively, this month due to the strengthening of the Philippine Peso against the US Dollar and lower fuel prices (for coal and Malampaya natural gas).
About 98 percent of IPP charges and 72 percent of PSA charges are dollar-denominated.
The price of natural gas from Malampaya, which accounts for about 64 percent of Meralco’s supply, decreased this month as a result of quarterly repricing to reflect lower crude oil prices in the world market.
IPPs and PSAs provided 43 percent and 45 percent of Meralco’s supply needs, respectively.
Meanwhile, charges from the Wholesale Electricity Spot Market (WESM) increased by P3.5355 per kWh because of tight supply conditions in Luzon resulting in seven instances of Yellow Alerts and seven instances of Red Alerts declared by the National Grid Corporation of the Philippines (NGCP) during the supply month. WESM provided 12 percent of Meralco’s supply needs.
Transmission charge for residential customers decreased by P0.0808 per kWh due to higher system load factor. Taxes, and other charges also decreased by P0.1106 per kWh.
Meralco’s distribution, supply, and metering charges, meanwhile, have remained unchanged for 46 months, after these registered reductions in July 2015.
Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges.
Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the NGCP.
Taxes and other public policy charges like the FIT-All rate are remitted to the government.