The Christmas gift for the roughly 8.0 million customers of Manila Electric Company (Meralco) will be bundled up in their electric bills, as the overall tariff of the utility firm in its December billing cycle had been down by P0.7961 per kilowatt hour.

On an all-inclusive basis, the electricity rate of Meralco to be reflected in the bills will be reduced to P11.2584 per kWh compared to P12.0545 per kWh in November.

As a result, residential end-users in the typical 200-kilowatt hour consumption band would be able to enjoy aggregate rate reduction of P159; and it will be heftier P238 for those in the 300-kWh usage level.

According to Meralco, the downtrend in its tariff had been mainly traced to lower generation charge – generally ushered in by lower cost of supply procurements from its contracted independent power producers (IPPs) and the Wholesale Electricity Spot Market.

It specified that generation charge had been pared by P0.6606 to P6.5332 per kWh this December from the month ago scale of P7.1938 per kWh.

For the other components in the rates, Meralco emphasized that the pass-on cost for transmission, taxes as well as other charges logged net reduction of P0.1355 per kWh; while the collection of feed-in-tariff allowance (FIT-All), as incentive to qualified renewable energy (RE) capacities, remains suspended.

On the generation charge, Meralco expounded that “WESM charges decreased by P2.7624 per kWh with the improved supply situation in the Luzon grid as demand went down by around 421 MW (megawatts) and average plant capacity on outage decreased by about 679 MW,” adding that “lower spot market prices avoided the imposition of the secondary price cap in November.”

The charges invoiced by its contracted IPPs had also been lower by P0.4731 per kWh – and that was “due to First Gas plants’ reduced use of more expensive liquid fuel and lower international coal prices.”

Meralco further indicated that the appreciation of the Philippine peso versus the US dollar similarly eased pressure on IPP prices; because 97% of their costs are dollar-denominated.

The lower charges of its two supply sources, Meralco noted, had essentially offset the P0.0805 per kWh upward adjustment in the charges for capacities procured from its power supply agreements (PSAs) with private generation companies.

For the November supply month that is reflected in the December billing, the power firm secured bulk of its supply portfolio from PSAs with 48% share; while procurements from IPPs had been relatively tamed at 32-percent; and its spot market exposure hovered at 20%.