Decline in electricity bills seen in September

Customers of Manila Electric Co. (Meralco) can expect their electricity bills to go down in September as the cost of power it bought from its suppliers softened this month due to the adequacy of supply and a dampened demand.

This will be a welcome relief for Meralco customers, who have put up with the successive increases in the generation charge component in their power bills in the past three months.

Sources privy to Meralco data explained that the cost of electricity that the distribution utility sources from the independent power producers—particularly the 1,000-megawatt Sta. Rita and the 500-MW San Lorenzo gas facilities in Batangas—was lower this month as the Malampaya gas facility operated for the full month of August.

This means the two gas plants owned by the Lopez-led First Gas are running again using the much cheaper natural gas provided by the Malampaya gas field.

The Malampaya facility was shut down for eight days in July, prompting the owner of the two plants to use the more expensive liquid condensate to ensure the stability of supply to Meralco by the Sta. Rita and San Lorenzo facilities. This led to a spike in the cost of power generated by the two gas plants and was reflected in the August billing statement of end-consumers.

Sources added that the cost of power traded in the wholesale electricity spot market (WESM) was much lower in August (which will be reflected in the September power bill) than in July. The decline was due to a lower offtake, which was caused by lower demand from end-consumers.

The cool climate and the brownouts that followed the heavy monsoon rains and massive flooding in August helped temper demand as well.

This month, Meralco had to jack up the generation charge by 28 centavos a kilowatt-hour to P6.7397 to reflect the increase in the cost of power it sourced from its IPPs and the WESM.

The power distributor earlier explained that the increase in generation charge this month was due to the eight-day shutdown of the Malampaya gas pipeline, which affected a third of the total power supply in Luzon in July.

IPP power rates rose 48 centavos a kWh combined to P5.58 while the cost of power from the WESM stood at P14.70 a kWh.

Meralco has since reiterated that it does not earn from any increases in the generation charge. Payment for the generation charge, which is a pass-through cost for Meralco, goes to the power producers such as Napocor, the IPPs and generators selling through WESM.

Meralco’s own charges account for only 16 percent of the total electricity bill.—Amy R. Remo