Meralco slashes power rates by P0.0286/kWh in July

Manila Electric Co. (Meralco), the country’s largest power distributor, is reducing electricity rate by P0.0286 per kilowatt-hour (kWh) in July due to lower demand amid the general community quarantine (GCQ) and modified general community quarantine (MGCQ) in its franchise area.

The rate reduction brings the overall electricity rate to P8.6966/kWh from June’s P8.7252/kWh.

The adjustment also translates to a reduction of around P6 in the total bill of residential customers consuming 200 kWh.

Meralco attributed the power rate reduction to the decline in generation charge.

The power distributor noted that the total rate decrease for generation charge has declined more than P1 per kWh since the start of the year.

“This month’s overall rate is significantly lower than that of July 2019, which was P9.9850 per kWh,” Meralco said.

“This month’s overall rate is also the lowest since September 2017.”

From P4.3413/ kWh in June, the generation charge decreased by P0.0069/kWh to P4.3344/kWh this July.

“Because of the reduction in power demand in its service area during the Modified Enhanced Community Quarantine (MECQ) and General Community Quarantine (GCQ), MERALCO continued to invoke the Force Majeure (FM) provision in some of its Power Supply Agreements (PSAs), reducing the generation cost that would have been charged by suppliers,” Meralco said.

The company said that this month, the FM claim totaled about P265 million, equivalent to customer savings of P0.0877/kWh in the generation charge. 

“This represents avoided charges from the temporary suspension of mid-merit supply contracts recently approved by the Energy Regulatory Commission (ERC),” it said.

“Without the FM claims, the total rate would have increased by P0.0717 per kWh from last month’s rate. For the past 4 months, the savings from FM claims totaled around P1.85 billion.”

Meanwhile, charges from the Wholesale Electricity Spot Market (WESM) decreased by P1.7803/kWh due to reduction in line rental cost related to Meralco’s supply contracts.

The share of WESM to Meralco’s supply needs went up to 15.9%.

Cost of power from Independent Power Producers (IPPs) increased by P0.4354/kWh mainly due to lower average plant dispatch with the five-day scheduled maintenance outage of San Lorenzo Modules 50 and 60.

Purchases from PSAs also inched up by P0.0455/kWh as a result of lower FM claim this month as compared with the previous month. 

“The peso’s appreciation mitigated further increases in IPP and PSA charges,” Meralco said.

IPPs and PSAs accounted for 33.2% and 50.9% of Meralco’s total supply, respectively.

The transmission charge for residential customers registered a reduction of P0.0426/kWh due to lower Ancillary Service Charges. 

This more than offset the P0.0209/kWh net increase of taxes and other charges, following the completion last month of the ERC-approved adjustment on Meralco’s system loss over/under-recoveries.

Collection of the Universal Charge-Environmental Charge amounting to P0.0025/kWh remains suspended, as directed by the ERC.

Meralco said its distribution, supply, and metering charges, meanwhile, have remained unchanged for 60 months, after these registered reductions in July 2015.

The company reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the National Grid Corp. of the Philippines.

Taxes and other public policy charges like the Universal Charges and the FIT-All are remitted to the government, it said. --KBK, GMA News