Meralco rates go down this month

Published February 6, 2020, 12:00 AM

by manilabulletin_admin

By Myrna Velasco

Driven mainly by lower cost of procurements from its new power supply agreements (PSAs), the overall pass-on tariff of Manila Electric Company (Meralco) this February billing will be cut by P0.59 per kilowatt hour.


The utility firm announced that its rates had been down to a two-year low of P8.8623 per kwh vis-à-vis last month’s P9.4523 per kwh.

For customers in the typical 200-kilowatt hour consumption band, the total reduction they will enjoy will be P118, as reflected in their bills this month.

Meralco stressed “the reduction is mainly due to a lower generation charge after the implementation of the new PSAs last December 26,” the reckoning date for the initial delivery of the plants that won in the company’s competitive selection processes (CSPs) in September last year.

Essentially, if the P0.41 per kwh drop in January bills will be added, the total cost downtrend in the bills of Meralco customers will already hover at P1.00 per kwh in the first two months of the year.

The utility firm said the downtrend in the power bill “goes against the usual trend of February rates adjusting upwards due to price normalization after reconciliation of outage allowances, as seen in the previous five years.”

For the generation charge, the calculated decrease was at P0.3949 per kwh to P4.5090 per kwh from the January level of P4.9039 per kwh.

The new PSAs that came on board into the utility firm’s supply portfolio were those contracted from San Miguel Energy Corporation for the Sual plant; South Premiere Power Corporation, which is also a San Miguel subsidiary for the Iligan plant; and the capacity procurement from AC Energy of the Ayala group.

The three contracts, according to Meralco, delivered at “significantly lower generation cost of P4.0372 per kwh.” By far, they account for 21-percent of the utility firm’s supply volume last month.

The other charges that had driven the rates down were the lower feed-in-tariff allowance (FIT-All) which had been trimmed by P0.1731 per kwh; and the decision of the state-run Power Sector Assets and Liabilities Management Corporation (PSALM) to stop the P0.0543 per kwh collection on the universal charge for stranded contract costs (UC-SCC) line item in the electric bills.

For supply procurements from the Wholesale Electricity Spot Market (WESM), the cooler temperatures and downward demand yielded relatively low spot price of P3.0529 per kwh. In the January supply month, Meralco’s capacity purchases from the spot market had been at a sizeable 23-percent.

The cost components that pulled down overall rates this month had also offset the increases relating to supply off-takes from contracted independent power producers (IPPs) and the old power supply agreements (PSAs) which had been primarily up by P0.7429 per kwh to P5.2920 per kwh.

There had also been P0.0888 per kwh hike in the ancillary services component of the transmission charges of system operator National Grid Corporation of the Philippines (NGCP); while taxes and other charges had been down by P0.2839 per kwh.

Meralco said the uptrend in IPP charges had been attributed to the “lower average plant dispatch resulting from the scheduled outage of Quezon Power and First NatGas-San Gabriel from January 17 to 25 and January 4 to 23, respectively.”
In the last supply month, Meralco noted that its capacity purchases from the contracted IPPs and older PSAs accounted for 56-percent of the total supply base.