Reduced power bills expected this month

MANILA, Philippines–Customers of power distributor Manila Electric Co. (Meralco) can look forward to a reduction in their power bills this January as the generation charge fell by 5 centavos per kilowatt-hour to P5.46 per kWh.

Households consuming 100 kWh a month can expect a decrease of P5 in their electricity bills, while those that use 200 kWh a month will enjoy a P10-reduction for January. Households that consume 300 kWh and 400 kWh monthly can also expect decreases of P15 and P20, respectively.

According to Meralco, the decline can be attributed to a reduction in the price of electricity purchased from the Wholesale Electricity Spot Market (WESM).

“WESM prices fell by P1.85 per kWh to P 7.14 per kWh in the December supply month from P9 per kWh in the November 2011 supply month,” the power utility said.

Meralco explained there was a gradual decline in spot market prices after the power supply situation in Luzon had normalized. It can be recalled that in late October 2011, the Luzon grid experienced generation capacity constraints due to the maintenance shutdown of the Malampaya natural gas pipeline, which supplies three facilities generating a combined 2,700 megawatts.

Total energy consumption also went down slightly due to cooler temperatures in December, Meralco added.

The power distribution firm noted that the reduction in WESM prices had offset the slightly higher prices from the Independent Power Producers (IPPs), whose prices went up by an average of 13 centavos. This can be attributed to the decrease in the dispatch level of the IPPs (electricity output) to 78.1 percent in the December supply month, from a high of 94.5 percent in November.

Meralco currently sources from three IPPs namely Quezon Power Philippines Ltd.’s coal-fired facility and the 1,000-megawatt Sta. Rita and the 500-MW San Lorenzo natural gas-fired power plants, which are both owned by the Lopez-led First Gas Holdings.

Meanwhile, the price of electricity sourced from state-run National Power Corp. (Napocor) remained stable.

The distribution utility said it sourced 12 percent of its electricity purchases last month from the WESM; 42 percent from the IPPs; and 46 percent from Napocor. The costs are reflected in the January electricity bills.

Meralco again stressed that the generation charge was entirely a pass-through charge and did not accrue or go to Meralco. The cost of electricity sold by the generating companies could move from month to month based on many factors beyond its control, among them fuel prices, the dispatch of the 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.