The customers of Manila Electric Company (Meralco) will experience a slight relief as the utility firm’s rates will be down by P0.2055 per kilowatt hour (kwh) in this August billing.

The overall resulting tariff to be passed on in this billing cycle will be at P8.4911 per kwh versus last month’s P8.6966 per kwh. By far, this month’s rate is considered the lowest in the past three years.

For end-users in the consumption threshold of 200-kWh, this will entail aggregate reduction of P41 in their electric bills this month.

The generation charge, which accounts for the bulk of the cost components being passed on, Meralco logged a reduction of P0.2103 per kwh to P4.1241 per kWh this August from P4.3344 per kwh in July.

The utility firm explained the main drivers for such cost downtrend had been the P1.12 per kwh decline in prices from the Wholesale Electricity Spot Market (WESM) as well as lower charges billed by its contracted independent power producers (IPPs).

For the other cost components in the bill, the transmission charge’s ancillary services fraction went down very marginally by P0.0081 per kWh; which practically helped cushion the P0.0129 per kWh net increase in taxes and other charges.

As to the WESM procurement of supply, Meralco explained that this ended lower “due to improved supply situation in the Luzon grid with lower average plant capacity on outage.”

The utility firm added “there were also no yellow alerts in July,” versus the occurrence of at least one yellow alert or supply tightening in June, which then precipitated rise in spot prices. Last month, the share of supply sourced by Meralco from the spot market hovered at 15.5-percent.

Supply sourcing from the IPPs, on the other, logged cost decrease of P0.3284 per kWh “due to lower natural gas prices as a result of quarterly repricing.”

Meralco explained “the price of natural gas from Malampaya is indexed to international crude oil prices,” which apparently had plummeted to all-time low levels in the last quarter.

“The significant reduction in crude oil prices in the first half of the year was reflected in the Malampaya natural gas price this month,” the utility firm stressed.

Moreover, the strengthening of the Philippine peso versus the US dollar also contributed to the overall reduction in charges that the IPPs have billed to the utility firm this month.

Conversely, the power firm indicated that its purchases from power supply agreements (PSAs) had been higher by P0.2722 per kWh, and that was mainly attributed to “lower average plant dispatch and lower force majeure (FM) claims.”

Given the persisting demand downtrend at its service area, Meralco said it continually invoked force majeure claims with counter-party power suppliers, hence, in its August billing it was still able to corner P82 million of FM claims which resulted in equivalent P0.0285 savings or reduction in billed costs to customers.

The share of IPP-sourced supply in the July portfolio of Meralco had been at 33.9-percent; while PSAs contributed 50.6-percent on aggregate supply. (