Manila Electric Co. (Meralco) is slightly lowering electricity prices this month, using billions of pesos in regulatory refunds and new tax breaks to shield consumers from the typical price spikes caused by the summer heat.

The country’s largest power distributor announced on Wednesday, May 12, that the overall rate for a typical household fell by ₱0.0151 per kilowatt-hour, bringing the effective rate to ₱14.4396 per kWh from ₱14.3345 per kWh in April.

The marginal adjustment comes as the Energy Regulatory Commission (ERC) moves to cushion consumers from price volatility exacerbated by regional geopolitical tensions and seasonal demand spikes.

The primary driver for the decline was the acceleration of the refund totaling ₱14.2 billion. Under ERC direction, Meralco condensed the refund period to 12 months from the original 24-month schedule, effectively more than doubling the residential refund rate to ₱0.4278 per kWh.

Joe Zaldarriaga, Meralco spokesperson, said the proactive efforts by the regulator were essential in managing the impact of global energy price pressures on local households.

Further downward pressure on bills stemmed from a ₱0.1482 per kWh net decrease in taxes and miscellaneous charges. This included the implementation of the value-added tax (VAT) exemption on power sourced from indigenous natural gas under Republic Act No. 12120.

Consumers also saw the suspension of the ₱0.0371 per kWh Green Energy Auction Allowance through June 2026, alongside a modest ₱0.0493 per kWh reduction in transmission charges.

According to Meralco, these reductions served as buffer against rising generation costs, which climbed to ₱7.7942 per kWh this month. Higher costs were largely attributed to the First Gas plants, Sta. Rita and San Lorenzo, where prices rose by ₱0.1786 per kWh.

Meralco noted that nearly 99 percent of these costs are dollar-denominated, making them highly sensitive to the peso’s recent depreciation against the United States (US) dollar.

However, the outlook for the coming months remains pressured by peak summer temperatures as Larry Fernandez, Meralco head of utility economics, noted that the franchise area recently hit its highest power demand of the year.

“There is pressure for spot market prices to rise as temperatures climb, leading to higher electricity consumption. Yesterday saw the highest power demand so far in the Meralco franchise area, as we are now in the peak of summer,” Fernandez said.

While higher temperatures typically lead to price spikes in the Wholesale Electricity Spot Market (WESM), Fernandez said the final trend for June will depend on the interplay between fuel costs and the exchange rate.

Data from the Independent Electricity Market Operator of the Philippines (IEMOP) showed that average WESM prices jumped 30.6 percent to ₱5.63 per kWh in April as demand surged by 7.6 percent.

However, Isidro Cacho, IEMOP vice president for trading operations, noted that the temporary market suspension by regulators helped mitigate extreme volatility during periods of supply tightness.