Meralco bills to go down in September

MANILA, Philippines—Customers of the Manila Electric Co., the country’s biggest power distributor, may look forward to hefty reductions in their electricity bills this month as the generation, transmission and system loss charges of the utility fell by a hefty P1.73 per kilowatt-hour.

This means that households consuming 100 kWh a month can expect a reduction of P173 in their electricity bills, while those who use up 200 kWh a month (the average consumption in the residential sector) will pay P346 less in September.

Households consuming 300 kWh and 400 kWh a month can also expect decreases of P519 and P692, respectively.

In a statement issued on Thursday, Meralco said the generation charge—which comprised 60 percent of a consumer’s electricity bill—fell by P1.34 per kilowatt-hour to P5.40 per kWh in September from the previous month’s P6.74 per kWh. This month’s generation charge may be the lowest since March 2012.

The decline in the generation charge, according Meralco, can be attributed to a significant drop in the cost of power taken from the wholesale electricity spot market (WESM), whose charges fell to P8.74 per kWh during the August supply month.

“A number of factors led to this decrease including lower demand for electricity that can be attributed to the rainy weather brought about by typhoon Gener and the monsoon rains. The long weekends in August likewise led to lower demand. At the same time, the availability of hydro-electric power plants improved and helped bring down spot market prices,” the distribution utility explained.

The cost of power from the independent power producers (IPPs) also decreased by 48 centavos per kWh. Specifically, Meralco sources its power from four IPPs—Quezon Power Philippines Ltd.’s coal-fed facility, the 1,000-megawatt Sta. Rita, the 500-MW San Lorenzo natural gas-fired plants and SEM Calaca’s 600-MW coal facility in Batangas. The Sta. Rita and San Lorenzo plants are owned by the Lopez-led First Gas Holdings.

“Operations of the Malampaya pipeline went back to normal so that the Sta. Rita and San Lorenzo gas-fired power plants of First Gas were again able to operate on cheaper natural gas. It will be recalled that during the Malampaya pipeline shutdown in July, Sta. Rita and San Lorenzo resorted to using more expensive liquid fuel to ensure continuity of supply,” the company explained.

The 47-centavo-per-kWh increase in the cost of electricity taken from the state-run National Power Corp. did not offset the decreases in the other components of the power bill.

Of its total electricity requirements, Meralco sourced 3.5 percent from the WESM, 47.3 percent from the IPPs and 49.2 percent from Napocor.

At the same time, the transmission charge also declined by 14 centavos per kWh due to lower ancillary service charges from the National Grid Corp. of the Philippines (NGCP), while the system loss charge decreased by 16 per kWh. Another 9-centavo-per-kWh decline was also noted in taxes.

Meralco stresses that it does not earn from the pass-through charges, the largest of which is the generation charge. Payment for the generation charge goes to the power producers such as Napocor, the IPPs and WESM. The rest of the pass-through costs include transmission, taxes and other charges.

Meralco’s distribution, supply, and metering charges, meanwhile, account for only about 16 percent of the total electricity bill.