Owing primarily to the new batch of refund ordered by the Energy Regulatory Commission (ERC), customers of Manila Electric Company (Meralco) will benefit from a rate cut of P0.7067 per kilowatt hour (kWh) in this July billing cycle, as its all-inclusive rate went down to P9.745 per kWh from P10.4612 per kWh in June.

For residential end-users in the typical 200-kilowatt hour consumption bracket, the resulting price reduction in their bills will be P141.34, according to the power utility firm.

“This month’s reduction effectively reversed all increases in the overall power rates since the start of the year,” the utility firm stressed.

To recall, the ERC announced last week the P21.769 billion worth of refund that it mandated Meralco to implement starting this billing month – and the resulting rate cut to residential consumers had been pegged at P0.87 per kWh.

The cost-payback to customers, according to the industry regulator, accrued from July 2015 to June 2022; and this was calculated from the adjustments of regulatory asset base (RAB) and the re-computation of the interim average rate (IAR) of Meralco, which are key elements in the determination of the utility firm’s pass-on rate to customers.

The total customer pay-back enforced by Meralco in the four batches of refund decreed by the ERC already summed up to P48.2 billion – including the three initial orders that amounted to P13.9 billion in January 2021; P4.8 billion additional refund in February 2022; and the P7.7 billion that had been mandated in March this year.

Atty Jose Ronald V. Valles explained that “as a highly regulated entity, Meralco’s rates undergo a review and confirmation process to make sure they are fair and reasonable,” with him emphasizing that “the immediate implementation of the ERC decision was able to more than offset the impact of higher generation charge this month to the benefit of our customers.”

Without the refund order from the regulator, the overall pass-on tariff of Meralco this month should have risen because of anticipated hike in the generation charge component of its rate – which accounts for more than 50-percent of the cost pass-on that the utility firm has been reflecting in the monthly electric bills.

Meralco emphasized its generation charge had gone up by P0.2166 per kWh to P6.7756 per kWh from last month’s P6.5590 per kWh -- and that was mainly triggered by the soaring prices of fuel that are used in power generation, as well as the spikes experienced in the Wholesale Electricity Spot Market (WESM) settlement prices, especially during the incidents of ‘yellow alert’ conditions in the main power grid of Luzon.

Meralco stated that “this month’s generation charge includes the last installment of deferred generation costs for the April bill - equivalent to an add-on of around P0.13 per kWh in the generation charge.”

On the other rate components, the ancillary services (AS) charges of system operator National Grid Corporation of the Philippines (NGCP) had been marginally adjusted downwards by P0.0012 per kWh; while taxes and other charges posted a net decrease of P0.0565 per kWh.

In terms of supply procurement, Meralco secured bulk of its requirements last month from its power supply agreements (PSAs) for 50-percent; while its contracted independent power producers (IPPs) provided 43-percent fraction in the pie; and the balance of 7.0-percent was sourced from the spot market. (MMV)