Largest power retailer Manila Electric Co. (Meralco) reduced electricity rates for January, defying earlier projections of a price hike as lower transmission and generation costs offset new environmental subsidies.

In a briefing on Monday, Jan. 12, Meralco Spokesperson Joe Zaldarriaga said that overall rates for a typical household fell by ₱0.1637 per kilowatt-hour, bringing the effective rate to ₱12.9508 per kWh from ₱13.1145 per kWh in December.

For a residential customer consuming 200 kWh, the adjustment translates to a savings of roughly ₱33 on this month’s bill.

Zaldarriaga said the downward movement was primarily driven by a ₱0.10 per kWh reduction in transmission charges, which settled at ₱1.0368 per kWh.

Meralco attributed the decline to lower ancillary service costs from the National Grid Corporation of the Philippines. These costs, which cover the reserves necessary to maintain grid stability, eased following adjustments in the Reserve Market and the implementation of Ancillary Service Procurement Agreements.

Generation charges also trended lower, falling to ₱7.7471 per kWh. The decline was fueled by a ₱1.1898 per kWh drop in prices from the Wholesale Electricity Spot Market, as improved power supply conditions in the Luzon grid outweighed demand.

Furthermore, costs from Power Supply Agreements decreased by ₱0.0516 per kWh, aided by the return to service of the San Buenaventura Power Ltd. Co. plant.

These gains were partially eroded by a ₱1.4879 per kWh surge in charges from Independent Power Producers.

The spike followed the Energy Regulatory Commission’s approval of a new calculation method for First Gas Power Corp. under an interim contract extension with Meralco. This regulatory shift led to higher fixed fees, particularly from the Sta. Rita power plant.

The rate reduction also comes as Meralco begins collecting the Green Energy Auction Allowance, a new ₱0.0371 per kWh charge mandated by the ERC. The collection is designed to fund renewable energy projects and will be remitted to the state-owned National Transmission Corp.

Zaldarriaga noted that the allowance would appear as a separate line item on consumer bills. Despite the introduction of this new fee, the cumulative impact of lower fuel and transmission costs allowed Meralco to deliver a net reduction to consumers at the start of the year.