P7.8-B refund order lowers Meralco rate in May billing

Published May 11, 2022, 2:09 PM

by Myrna M. Velasco

The overall tariff to be passed on by Manila Electric Company (Meralco) in this May billing had been reduced by P0.12 per kilowatt hour (kWh), a reverse from the earlier projection of a rate hike, to reflect the P7.8-billion consumer refund ordered by the Energy Regulatory Commission (ERC)

According to Meralco, its electricity rate had been decreased to P10.0630 per kWh in May from last month’s P10.1830 per kWh. The decline in electricity tariff will redound to P24 reduction in the bill of consumers for those consuming 200-kWh.

“The overall reduction was mainly due to the ERC order to Meralco to refund a total of P7.8 billion following the validation of Meralco’s third regulatory tariffs for the period July 2011 to June 2015,” the power firm said.

The impact of the rate payback should have been higher at P0.4669 per kWh drop in the electric bills of consumers, but the uptick in the generation charge provided a counterbalance to what have been anticipated as bigger rate cut.

As noted by Atty. Jose Ronald V. Valles, head of regulatory management of Meralco, “the immediate implementation of the ERC’s order more than offset the impact of the increase of the generation charge this month.”

In particular, that cost component had been calculated at P6.2277 per kWh for the May billing, higher by P0.3553 per kWh from last month’s P5.8724 per kWh.

Conversely, the other cost components in the bill logged slight decrease of P0.0084 per kWh within this billing cycle, primarily covering transmission charge, taxes and other charges.

For the generation charge in the May billing, Meralco emphasized that such integrate add-on cost of P0.20 per kWh accounts for “the second of three installments covering the deferred generation costs for the March bill and the first of three installments for the deferred generation costs for the April bill.”

On the distribution firm’s procurement of supply from power supply agreements (PSAs), this climbed by a significant P0.8045 per kWh while sourcing from contracted independent power producers (IPPs) declined by P0.4319 per kWh.

The scale of Meralco supply sourced from the PSAs last month hovered at 48 percent of total while IPP procurements contributed 41 percent, and purchases from the Wholesale Electricity Spot Market (WESM) stood at 11 percent.

The company explained that “the price of Malampaya gas increased by 10 percent starting this quarter,” and that had been mainly anchored on the upswing of prices in the world market.

Meralco indicated that about 36 percent of its supply came from the generated capacities of the gas plants of First Gen Corporation in Batangas – and apart from the gas fuel, supply from these electric generating facilities had likewise been affected by the very volatile exchange rate between the Philippine peso and the US dollar.

“These suppliers’ charges were also affected by the peso’s depreciation and an increase in usage of more expensive fuel resulting from the Malampaya consortium’s continued failure to provide adequate natural gas supply,” the utility firm said.