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Meralco to cut rates this month

/ 01:11 AM May 09, 2012

Manila Electric Co. customers can expect lower power bills in May as the generation charge fell by 6.38 centavos to P5.5983 per kilowatt-hour.

Meralco’s utility economics head Lawrence Fernandez said in an interview that households consuming 101 kWh a month can expect a decrease of P6.44, while those that use 200 kWh will see a P12.76 reduction.

Households that consume 300 kWh and 400 kWh can expect savings of P19.14 and P25.52, respectively, he added.


According to Meralco, the country’s biggest power distributor, the reduction would have been bigger if not for an increase in the rates of state generator National Power Corp. effective this month. Meralco sourced 52.8 percent of its power requirements from Napocor last month, the company said in a statement it issued Tuesday.

It will be recalled that the Energy Regulatory Commission in an order in March allowed Napocor to hike its generation charge in Luzon by 69.04 centavos per kWh, the Visayas by 60.60 centavos and Mindanao by 4.42 centavos.

The approval covered the joint applications filed by Napocor and the Power Sector Assets and Liabilities Management Corp. (PSALM) for a rate increase under the generation rate adjustment mechanism (GRAM), which allows utilities to recover costs associated with fuel and purchased power, and the incremental currency exchange rate adjustment (Icera) mechanism, which allows utilities to recover foreign exchange-related costs.

Meralco, however, noted that the increase in Napocor rates was tempered by “downward adjustments in the charges of the wholesale electricity spot market (WESM) and the independent power producers (IPPs).”

WESM prices, according to the distribution utility, were tempered by an increase in output of coal-fired power plants and power imported from the Visayas.

The cost of power from WESM, which contributed 4.3 percent of Meralco’s power requirements, fell by 94 centavos per kWh during the supply month of April.

At the same time, the cost of power sourced from the IPPs decreased by 21 centavos per kWh, due mainly to increased output from Quezon Power.

Meralco got 42.7 percent of its electricity requirements last month from four IPPs—Quezon Power Philippines Ltd.’s coal-fed facility, the 1,000-megawatt Sta. Rita and the 500-MW San Lorenzo natural gas-fired plants, and SEM Calaca’s 600-MW coal facility in Batangas. The Sta. Rita and San Lorenzo plants are owned by the Lopez-led First Gas Holdings.


Meralco reiterated that the cost of power sold by the generating companies could fluctuate monthly due to several external factors such as the supply-demand situation, fuel prices and the foreign exchange rate.

As part of its sourcing strategy, Meralco buys power from different sources to obtain adequate and reliable power at the most reasonable price.  Amy R. Remo

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TAGS: energy regulatory commission, Meralco, napocor, power industry, power prices, Power Sector Assets and Liabilities Management Corp., Wesm, Wholesale Electricity Spot Market
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