Filipino households can breathe a sigh of relief as Manila Electric Co. (Meralco) announced a reduction in electricity bills, providing a much-needed break from the consecutive price hikes of recent months.
In a briefing on Wednesday, Sept. 10, Joe Zaldarriaga, Meralco Vice President and Head of Corporate Communications, said that the power distributor would implement a ₱0.1852 per kilowatt-hour (kWh) reduction.

Zaldarriaga said this brings the overall household rate down to ₱13.0851/kWh from ₱13.2703/kWh.

For households that consume an average of 200 kWh, this translates to a ₱37 decrease in their monthly bill.

This marks the first rate reduction after two consecutive months of increases.

“We hope that along with relatively lower consumption during this period, this rate cut will bring relief to our customers,” Zaldarriaga told reporters.

The primary reason for the price reduction is a decrease in the generation charge, which covers the cost of power purchased from Meralco’s suppliers.

According to Meralco, this was driven by lower costs from Independent Power Producers (IPPs) and Power Supply Agreements (PSAs), resulting in a ₱0.2603/kWh decrease in the generation rate.

Zaldarriaga explained that the strengthening of the Philippine peso positively impacted both IPP and PSA rates since they are dollar-denominated.

This reduction helped offset higher prices in the Wholesale Electricity Spot Market (WESM), which rose by ₱0.375/kWh due to increased demand in Luzon. It also tempered the impact of the start of contract price adjustments from Sual Power, Inc. (SPI) and South Premiere Power Corp. (SPPC). This adjustment will result in a ₱0.26/kWh collection over six months.

Moreover, not all charges decreased. The transmission charge went up by ₱0.1130/kWh due to higher ancillary service rates from the Reserve Market. Other charges, including taxes, saw a net decrease of ₱0.0379/kWh.

However, consumers’ recent relief from high electricity bills may be short-lived, as Meralco anticipates a potential price increase of ₱0.32 per kilowatt-hour (kWh) starting in October.

According to Larry Fernandez, Meralco Head of Utility Economics, this potential spike is primarily driven by the recently approved extension of Meralco's deal with the First Gas Sta. Rita Power Plant to secure additional power capacity.

“Just to make sure the supply situation in Luzon remains secure and efficient, Meralco and First Gas proposed to extend the supply contract,” Fernandez said.

The Energy Regulatory Commission (ERC) approved the interim extension of Meralco's power supply deal with the Lopez-led First Gas Corporation, securing 1,000 megawatts (MW) of supply from the Sta. Rita natural gas plant. This approval was granted after the original contract was set to expire in August.

Fernandez explained that extending the power supply deal is crucial for ensuring grid security and maintaining the operations of Malampaya's natural gas facility, which supplies power to both the Sta. Rita and San Lorenzo plants.

“In total, including the San Gabriel power plant that also uses Malampaya, around 2,000 MW of capacity could be affected by halted Malampaya operations,” he added.