Meralco users may expect lower rates in Dec.

Customers of Manila Electric Co. (Meralco) may look forward to a reduction in their power bills this December after the power distributor reported a drop in generation charge by 27 centavos per kilowatt-hour to P5.51 per kWh.

Households consuming 100 kWh a month can expect a decrease of P27 in their electricity bills, while those that use up 200 kWh a month will enjoy a reduction of P54 for December. Households that consume 300 kWh and 400 kWh monthly can also expect decreases of P81 and P108, respectively.

According to Meralco, the decline in the generation charge was due to a reduction in the price of power purchased from the Wholesale Electricity Spot Market (WESM).

“WESM prices fell by P3.49 per kWh, from a high of P12.48 per kWh in the October 2011 supply month to P9.00 per kWh,” the company said in a statement.

In October, WESM prices rose due to a generation supply constraint brought about by the maintenance shutdown of the Malampaya natural gas pipeline that month.

When the pipeline resumed normal operations in November, power plants relying on Malampaya for fuel were able to produce more power. This helped ease the supply constraint and bring down WESM prices, Meralco explained.

The reduction in WESM prices had offset the increase in charges made by Independent Power Producers (IPPs), whose prices went up by an average of 38 centavos per kWh.

“The First Gas plants (Sta. Rita and San Lorenzo), which started utilizing banked gas in October, already had to run on regularly priced Malampaya gas for the remainder of November. The IPP prices were also affected by the peso’s depreciation against the US dollar,” Meralco explained.

The distribution utility said it sourced 8.9 percent of its electricity purchases last month from WESM; 48 percent from IPPs; and 43.1 percent from state-owned National Power Corp.

The power distributor again stressed that the generation charge was entirely a pass-through charge and would not accrue or go to Meralco. The cost of electricity sold by generating companies could move from month to month based on factors beyond the company’s control, among them fuel prices, the dispatch of IPPs, the foreign exchange rate and WESM prices.

The generation charge, which is the electricity bill’s biggest component, averaged about 60 percent of the customer’s average monthly power bill. This goes directly to Meralco’s power suppliers.