Meralco slashes power rates for 2nd straight month in March

Customers of the Manila Electric Co. (Meralco) can expect lower monthly electricity bills this month as the distribution utility is slashing anew the electricity rates, reflecting the government-mandated refund to its consumers.

On Tuesday, Meralco said it is reducing household power rates by P0.3598 per kilowatt-hour (kWh), bringing the overall rate to P8.3195/kWh in March from P8.6793 in February.

This is the second consecutive month that the power distribution firm implemented rates reduction.

The P0.3598/kWh rate rollback is equivalent to a decrease of around P72 in the total bill of residential customers consuming 200 kWh.

This month’s rate is the lowest since August 2017, according to Meralco.

“Meralco will start implementing the Distribution Rate True-Up refund this month, which is the primary reason for this month’s rate reduction,” the company said.

To recall, the Energy Regulatory Commission (ERC) provisionally approved Meralco’s proposal to refund around P13.9 billion over a period of 24 months or until the amount is fully refunded. 

The amount represents the difference between the Actual Weighted Average Tariff and the ERC-approved Interim Average Rate for distribution-related charges for the period July 2015 to November 2020. 

For residential customers, the refund rate is P0.2761/kWh and will appear in customer bills as a line item called “Dist(ribution) True-Up.”

The Meralco added that this month’s rate also still includes the ERC-approved adjustments for pass-through over/under-recoveries for the period January 2017 to December 2019. 

In an Order released December 29, 2020, the ERC directed Meralco to refund over-recoveries in transmission and other charges over a period of approximately three months and to collect an under-recovery in the generation rate for approximately 24 months. 

Meralco said it implemented the ERC-approved adjustments starting January 2021. 

The impact to residential customers, from the months of January to March 2021, is a net refund of around P0.1150 per kWh, it said.

Apart from the government’s refund orders, Meralco also attributed the lower power rates to the decline in generation charge by P0.0403/kWh to P4.3749/kWh in March from February’s P4.4152 per kWh.

“The reduction was due to the higher share of supply from the Wholesale Electricity Spot Market (WESM), which registered the lowest charge among suppliers,” it said.

Despite an increase in Luzon peak demand from 9,162 megawatts (MW) to 9,574 MW, charges from the WESM remained relatively stable at P2.4609 per kWh, the power distributor noted.

WESM’s share to Meralco’s power requirements increased to 11.7% from 7.1 % in the previous month.

“The low WESM charges offset increases in costs from Power Supply Agreements (PSA) and Independent Power Producers (IPPs) of P0.0175 per kWh and P0.1338 per kWh, respectively,” Meralco said.

“The higher PSA and IPP charges were the result of the Peso’s depreciation and lower average plant dispatch,” it said.

The shares of PSAs and IPPs to Meralco’s power requirements went down this month to 52.5% and 35.8%, respectively, from 53.4% and 39.5%, respectively, last month.

Transmission charge for residential customers, meanwhile, inched up by P0.0022 per kWh, while taxes and other charges registered a net decrease of P0.0456 per kWh.

Meanwhile, collection of the Universal Charge-Environmental Charge amounting to P0.0025 per kWh remains suspended, as directed by the ERC.

Meralco said its distribution, supply, and metering charges, meanwhile, have remained unchanged for 68 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 NGCP (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 added. — RSJ, GMA News