Meralco bills lower in October

Electricity consumers may expect a P0.54 per kilowatt-hour (kWh) reduction in their October bill due to the decline in the generation charge and other components of the bill.

The bill of a typical household consuming 200 kWh will go down by around P108 this month, Manila Electric Co. (Meralco) on Thursday said.

The generation charge has gone down by P0.49 per kWh from P5.17 per kWh. Now at P4.68 per kWh, the generation charge is at its lowest level since October 2010, Meralco said.

This was driven by the P8.99/kWh reduction in the cost of power sourced from the Wholesale Electricity Spot Market (WESM).

Spot market prices have generally declined because of the higher availability of hydroelectric plants. Another factor in the lower generation charge was the end of the Incremental Currency Exchange Rate Adjustment (Icera) collection by the National Power Corp. (Napocor), Meralco said.

Icera allows Napocor to recoup additional costs arising from foreign exchange movements.

The average cost of power sourced from plants selling to Meralco under the Power Supply Agreements (PSAs) also decreased by P0.04 per kWh to P4.17, from P4.21.

The Independent Power Producers (IPPs) likewise registered a reduction of P0.26. IPP rates dropped to P5 per kWh this month from the previous month’s level of P5.26 per kWh.

Also, the PSA and IPP rates went down with the strengthening of the peso.

Meralco sources 52 percent of its power requirements from PSAs. IPPs and WESM accounted for 40 percent and 8 percent of Meralco’s requirements, respectively.

Meanwhile, taxes, which consist of the value added tax (VAT) and local franchise tax (LFT), decreased by about P0.01 per kWh. Other bill components, which include subsidy and system loss, had a total reduction of more than P0.03 per kWh.

Meralco reiterated that 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 and WESM.

The rest of the pass-through costs include transmission, taxes, universal charges, and other charges.

Meralco’s distribution, supply, and metering charges on the average account for about 18 percent of a consumer’s electricity bill.