Meralco rates down in March; rate hikes seen in April and May

MANILA, Philippines — The Manila Electric Co. (Meralco) said Monday that overall rates for March fell slightly from last month as energy contracts provided savings in power generation, which made up the bulk of monthly charges.

Meralco said in an advisory that overall rates for March went down by P0.095 per kilowatt-hour (kWh) compared to February 2015 rates. For a typical household consuming 200 kWh, this is equivalent to a decrease of around P19 in their electricity bill, according to the utility firm.

Generation charge (the portion of the bill that goes to the generation companies or power producers) dropped by P0.029 per kWh from P5.238 to P5.209. This was driven by the P0.30 reduction in the average rate of Meralco’s Power Supply Agreements (PSAs) for the February supply month due to higher dispatch of the plants under the PSAs. Dispatch during a supply month gets billed the following month.

PSAs’ share to Meralco’s total power requirements went up from 49 percent to 54 percent. This was dampened by an increase of P1.14 per kWh in the average price of the Wholesale Electricity Spot Market (WESM) and P0.18 per kWh in the case of Independent Power Producers (IPPs).

WESM’s share to Meralco’s total power requirements went up from 4 percent to 4.5 percent due to Quezon Power Philippines Ltd.’s maintenance outage. For the same reason, the share of IPPs went down from 47 percent to 40.5 percent. The balance of Meralco’s power requirements was accounted for by the Interim Power Supply Agreements (IPSAs).

Transmission charges also went down by P0.045 per kWh due to lower ancillary charges. Other charges, which include system loss charge and subsidies, registered a decrease of P0.010 per kWh. These reductions resulted in corresponding decreases in taxes (VAT and local franchise tax) of P0.011 per kWh.

Meralco’s distribution charge remained unchanged since July 2014.

The power retailer has reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers such as the plants selling to Meralco through the WESM and under the PSAs, IPPs, and IPSAs. Payment for the transmission charge goes to the National Grid Corp. of the Philippines (NGCP).

Of the total bill, Meralco says it only gets the distribution, supply, and metering charges. In the wake of the Malampaya deepwater gas-to-power facility shutdown from mid-March to mid-April, power plants relying on the natural gas it supplies will need to shift to more expensive liquid fuel.

As a result of the use of liquid fuel, rates are expected to increase in the billing months affected by the shutdown and the impact of higher energy demand during the summer months. This includes both April and May 2015.

Given the high probability of higher rates in the coming months, Meralco reminded the public to observe energy efficiency tips. This includes setting the air conditioner’s thermostat from high cool (18 degrees Celsius) to mid cool (25 degrees Celsius).

By doing so, customers may save up to P280 per month. Electric fans should also be regularly cleaned from dust accumulation on the fan blades and motor housing.

This saves around 3 percent in electricity costs. Likewise, adjusting fan settings to low speed can save 12 percent – 23 percent.

Ironing a large batch of clothing at one time can also save on energy costs. Thus, it would be advisable to schedule ironing on morning of weekends when the demand for electricity is low. Switch the iron off in the last few minutes of ironing. The remaining heat would be enough to press lighter materials, Meralco said.