CONSUMERS OF power distributor Manila Electric Co. can expect their electricity bills to go down by 68.4 centavos a kilowatt-hour (kWh) this month as the basic generation charge fell to P5.4119 a kWh.

This means that a residential customer consuming 100 kWh a month will have a bill reduced by P68.43 this September, while those consuming 200 kWh a month can expect a P136.86 decrease in their bills. For those consuming 300 kWh, the reduction would be much higher at P205.29.

According to Meralco, the decline in the electricity bills this month was due to a drop in the prices of electricity that the utility sources from its independent power producers (IPPs) and the wholesale electricity spot market (WESM). These decreases had also offset the higher cost of power bought from the state-owned National Power Corp. last month.

Meralco disclosed that WESM prices fell more than P5 a kWh to P5.95 in August, which contributed largely to the September generation charge reduction.

The rates of the IPPs, as reported earlier, registered an average decline of 18.2 centavos a kWh to P4.49 a kWh.

Of the power firm?s IPPs, Quezon Power Philippines Ltd. (QPPL) registered the biggest reduction of almost P1 a kWh. The rates of Meralco?s two other IPPs?the 1,000-megawatt Sta. Rita and the 500-MW San Lorenzo natural gas-fired power plants?also declined by 3.23 and 4.72 centavos a kWh, respectively.

The distribution utility explained that the reduction in IPP rates was largely due to the higher capacity factor for all three IPPs, resulting in lower fixed cost a kWh.

Meanwhile, the decline in IPP and WESM prices helped offset Napocor?s rate increase of P1.65 a kWh, which brought its effective rate to P6.60 a kWh.

According to Meralco, the Napocor rate increase was brought by increases in its fuel and purchased power cost adjustment (FPPCA) of P1.0857 a kWh and forex adjustment of 15.15 centavos a kWh.

Since March this year, state-owned Napocor has been implementing an automatic rate adjustment mechanism, in which it could adjust its rates based on the actual cost of its fuel and power purchases and movements in the foreign exchange rate.

The distribution utility added that the drop in electricity rates this month reversed the upward trend over the past three months, with the reduction of 68.4 centavos offsetting by 10 centavos the cumulative increase of 58.4 centavos from June to August.

The generation charge rose by 8.4 centavos a kWh in June, then by 5.8 centavos in July and by 44.2 centavos in August following a dramatic surge in WESM prices.

Meralco reiterated that the generation charge was entirely a pass-through charge and did not accrue to Meralco.

It explained that the cost of electricity sold by the generating companies could move from month to month based on many factors beyond its control, among them fuel prices, working condition of the power plants and WESM prices.