The script for market dynamics will be flipped this April because instead of a rate hike, power utility giant Manila Electric Company (Meralco) is hinting at a rate reduction in the electric bills of its roughly 8.0 million customers within this billing cycle.

Meralco Vice President and Head of Corporate Communications Joe Zaldarriaga cited at least two factors that will propel downtrend in this month’s electric bills – primarily the lower prices of liquefied natural gas (LNG) and the recently enforced settlement suspension for the reserve market.

The company qualified that calculation for the April rate adjustment is still being firmed up, but initial figures track an overall tariff decline.

“Though we have yet to finalize the final figures, indications point to overall lower power rates this month mainly for two reasons - we see both lower generation and transmission charges,” he stressed.

Zaldarriaga indicated that for the generation charge, in particular, gas prices tapered off and substantial part of that had been due to the lower cost of imported liquefied natural gas.

It is worth noting that a significant chunk of Meralco’s supply sourcing is still with gas-fed power facilities – both for its ‘legacy contracts’ underwritten during the development regime of the independent power producers (IPPs); as well as its post-privatization era of power supply agreements.

With conspicuously dwindling gas supply being lifted from the Malampaya field, the saving grace for the continued operations of the country’s gas plants would be LNG procurement from offshore markets.

For the transmission charge, the Meralco executive emphasized that the cost tumble could be attributed to the temporary pass-on deferment of any cost adjustment accruing from the reserve market for ancillary services as mandated by the Energy Regulatory Commission.

Ancillary services account for the power supply being purchased by system operator National Grid Corporation of the Philippines (NGCP), which it has been utilizing to reliably operate the country’s electricity transmission system.

The pause on price settlements at the reserve market had been imposed by the industry regulator following observation of sudden cost uptick, which otherwise, could have resulted in escalation of overall charges in the consumers’ electric bills for this month.

To a great degree, the prospective dip in electricity rates this month would bring relief in consumers’ pockets, especially so since many homes have been cranking up their air-conditioning systems for extended hours.