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Meralco slashes February power rate by P0.0106/kWh

Customers of the Manila Electric Company (Meralco) can expect a sigh of relief this month as the power distributor slashed its household electricity rate for February.

In an advisory, Meralco said its overall household rate was reduced by P0.0106 per kilowatt-hour (kWh) to P10.8895 per kWh from January’s P10.9001 per kWh.

The reduction translates to a decrease of P2.12 in the electricity bill of a typical household consuming 200 kWh.

Meralco attributed the lower rates to the decline in generation charge by 21.37 centavos to P6.9154 per kWh from P7.1291 per kWh the previous month due to lower costs from the Wholesale Electricity Spot Market (WESM) and Independent Power Producers (IPPs) offset an increase in charges from Power Supply Agreements (PSAs).

In particular, WESM charges decreased by P3.7370 per kWh as the supply situation in the Luzon grid improved with less generation capacity on outage, lower demand, and absence of yellow alerts.

The secondary price cap mechanism was also not triggered, marking the first time since October 2021 that the cap was not imposed during a supply month.

WESM accounted for 16% of Meralco’s energy requirement in the period from the previous month’s 9%.

Charges from IPPs also went down by 29.50 centavos per kWh.

“The First Gas plants’ reduced use of more expensive alternative fuel and lower natural gas prices after the quarterly repricing of Malampaya gas that reflected recent trend in international crude oil prices pulled down the IPP rate,” Meralco said.

The continued appreciation of the peso, which affected 95% of IPP costs that are dollar-denominated, also contributed to the reduction, it added.

The peso ended January 2023 at its strongest level since end-May 2022. 

IPPs’ share to Meralco’s energy requirement for the period was at 37%.

On the other hand, PSA charges increased by 79.70 centavos per kWh due to lower average plant dispatch.

“Meralco’s 670-MW baseload PSA with South Premiere Power Corporation (SPPC) remains suspended following the implementation of a Court of Appeals-issued Writ of Preliminary Injunction in January that replaced the Temporary Restraining Order issued previously. PSAs provided 47% Meralco’s total energy requirement for the period,” the company said.

Meralco said the reduction in the generation charge balanced the impact of the completion of the third of four distribution-related refunds, equivalent to 19.23 centavos per kWh for residential customers and is no longer reflected in the customers’ electric bills starting February.

The remaining distribution-related refund, equivalent to 86.56 centavos per kWh for residential customers, continues to temper the monthly bills.

The last refund is set to be completed by May 2023, the impact of which will be felt the succeeding month.

Meralco’s distribution charge, on the other hand, has not moved since the 3.60 centavos per kWh reduction for a typical residential customer starting August 2022.

Meralco said all other charges, including transmission charge and taxes, registered a slight net increase of 1.08 centavos per kWh. 

Collection of the Feed-In Tariff Allowance (FIT-All) remains suspended following the issuance of the Energy Regulatory Commission’s Resolution halting the collection of 3.64 centavos per kWh FIT-All rate for three months from December 2022 to February 2023, the company said.

“Pass-through charges for generation and transmission are paid to the power suppliers and the grid operator, respectively, while taxes, universal charges, and Feed-In Tariff Allowance (FIT-All) are all remitted to the government,” it said.  —KBK, GMA Integrated News