Meralco cuts rates for August

AFP FILE PHOTO

MANILA, Philippines — Power distributor Manila Electric Co. bared Thursday its clients will enjoy lower electricity rates for the second straight month because of lower generation charges and other bill components.

The country’s biggest power distributor said there will be an overall P0.35 per kWh reduction in rates for the month of August. Previously, Meralco implemented a P0.30 per kWh cut in July rates.

For the month of August, the average client of Meralco — one using 200 kilowatthours (kWh) of electricity monthly — will see a P70 decrease in this month’s electricity bill. The savings for the same type of customer in July was P60.

Generation charge dropped by P0.28 per kWh from P5.33 per kWh to P5.05 per kWh. Meralco said this was the lowest level since May 2011 and was driven by the P5.27 per kWh reduction in the cost of power sourced from Wholesale Electricity Spot Market (WESM). Spot market prices went down as demand for power eased and the onset of the rainy season led to increased output from hydroelectric plants.

Average cost of power sourced from the Independent Power Producers (IPPs) also decreased by P0.05 per kWh to P5.29 from P5.34 per kWh. This was mainly due to lower coal and natural gas prices.

While the generation cost of the Power Supply Agreements (PSAs) had a slight upward adjustment of P0.05 per kWh, it remained the lowest cost of supply among the power suppliers, Meralco said. PSA rates moved to P4.24 from P4.19 per kWh.

The transmission charge registered a very slight decrease of P0.05 per kWh. Taxes, which consist of the value added tax and local franchise tax, decreased by P0.04 per kWh.

Other bill components, which include the system loss charge, power act reduction, subsidy, and universal charges, had a total reduction of P0.03 per kWh.

Meralco said it does not earn from these pass-through charges, the largest of which is the generation charge. Payment for the generation charge goes to the power suppliers such as the IPPs, plants selling to Meralco under the PSAs, National Power Corp. and WESM. The rest of the passthrough costs include transmission, taxes, universal charges, and other charges. Meralco’s distribution, supply, and metering charges account for only about 18 percent on the average of the total electricity bill.