Manila Electric Co. said electricity rates would go down in June on lower generation rates by suppliers.
Meralco said in an advisory that its overall rates decreased by 58 centavos to P9.40 per kilowatt-hour (kWh). For a typical household consuming 200 kWh, the overall electricity bill will go down by P116 compared to last month.
“This month’s reduction marks the fourth time this year that rates have gone down,” the company said.
The biggest factor that contributed to the lowering of the overall rates was the generation charge, which decreased by 36 centavos per kWh to P4.45 per kWh this month. This is its lowest level since October 2010, Meralco said.
Besides the generation charge, transmission charge also dropped 9 centavos per kWh. Taxes and other charges also went down by 6 centavos and 7 centavos per kWh, respectively.
The reduction was mainly driven by lower charges from plants under the Independent Power Producers (IPPs) and Power Supply Agreements (PSAs) due to lower fuel costs and higher dispatch of the plants.
After running for 19 days on alternate liquid fuel (while the Malampaya natural gas facility was on shutdown) during the April supply month, the natural gas power plants supplying Luzon operated on less expensive Malampaya natural gas in the supply month of May.
IPPs and PSAs registered reductions of 67 centavos and 59 centavos per kWh, respectively.
The reductions in IPP and PSA rates more than offset a P2.85 per kWh increase in charges from the Wholesale Electricity Spot Market (WESM).
WESM exhibited price spikes especially beginning the week of May 11, as a number of plants went on forced outages or reduced their output.
The high WESM clearing prices, which at times approached P30 per kWh, were sustained for the rest of the supply month.
According to the Philippine Electricity Market Corp. (PEMC), the operator of the WESM, regulatory price caps, which were set in place to prevent price shocks in the spot market, were not triggered.
The share of IPPs, PSAs, and WESM to Meralco’s total power requirements stood at 45 percent, 48 percent, and 7 percent, respectively.
In separate orders, all dated June 1, 2015, the Energy Regulatory Commission or ERC allowed Meralco generation cost under-recoveries (costs already paid to suppliers but not collected), transmission cost under-recoveries, system loss cost over-recoveries, and lifeline cost under-recoveries for January to December 2011.
The resulting rate amounted to a recovery of P0.0447 per kWh for a still undisclosed number of months starting June. Meralco said this was incorporated in so-called “other charges,” which posted an overall decline this month.
Meralco reiterated that it was not earning from the generation and transmission charges as these were pass-through costs. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to National Grid Corp. of the Philippines (NGCP). Of the total bill, only the distribution charge goes to Meralco.
The power retailer said its distribution charge had not registered any adjustment or change and has remained at the same level for almost a year or since July 2014 when it reflected a lower rate compared to June of the same year.