Despite an earlier projection of a rate hike, several cost-offsetting measures ultimately pulled down the electricity tariff of Manila Electric Company (Meralco) by a marginal P0.2087 per kilowatt hour (kWh) for the August billing cycle.
As noted by Meralco Vice President Lawrence S. Fernandez, there are at least three factors that triggered final reduction in current rate of Meralco to P9.5458 per kWh from last month’s P9.7545 per kWh.
Such cost-offsetting factors, he said, include the completion of the deferred summer cost recoveries in July and the reduction in the use of alternative fuel of First Gen Corporation, which is one of the major power suppliers of Meralco. Another factor for the rate cut is the order of the Energy Regulatory Commission (ERC) that reduces its distribution, supply and metering charges beginning in this month’s billing cycle.
For consumers in the typical 200-kWh usage level, the overall reduction they will experience in their bills will be P42, according to the power firm.
In particular, Meralco indicated that its generation charge for August had been slashed by P0.1944 to P6.5812 per kWh from P6.7756 per kWh in the previous month.
It explained that the cost downtrend had been “due to the decrease in charges from power supply agreements (PSAs), which more than offset increases in charges from Independent Power Producers (IPPs) and the Wholesale Electricity Spot Market (WESM).”
For the other cost components in the pass-on rate, the utility firm emphasized that “the transmission charge for residential customers had an increase by P0.0235 per kWh,” while taxes and additional charges had a very microscopic reduction of P0.0018 per kWh.
The power firm explained that the lowering of its own distribution charge by P0.0360, as rendered in a decision issued by the ERC last month, contributed to the overall rate downtrend in August billing.
When it comes to the decline in the overall generation charge, Meralco conveyed that PSA charges went down by P0.4273 per kWh; while billings from its contracted independent power producers (IPPs) conversely increased by P0.4213 per kWh.
The company specified that the decline in PSA charges had been mainly traced to the fact that in this month’s billing cycle, the deferred charges from rate upticks in the summer months of April, May and June, were no longer carried.
On higher IPP charges, Meralco pointed out that the main trigger to the increase was the re-pricing of Malampaya gas; which had been up by 15-percent due to surging fuel prices in the world market.
Additionally, the power firm stated that “charges from the WESM remained high, registering an increase of P0.0433 per kWh due to tight supply conditions in the Luzon grid.”
Meralco’s supply procurement last month had been mainly from its PSAs with 52-percent share; capacities from contracted independent power producers (IPPs) accounted for 43-percent; while sourcing from the electricity spot market had been at 5.0-percent.