The Manila Electric Company (Meralco) announced today that after last month’s reduction of P0.7067 per kWh in the total rate of a residential customer with 200 kWh consumption, another reduction will be felt in electricity bills this August.
The overall rate for a typical household went down by P0.2087 this month to P9.5458 per kWh from last month’s P9.7545 per kWh. This is equivalent to a decrease of around P42 in the total bill of a residential customer consuming 200 kWh.
With this adjustment, Meralco’s rates now have a combined reduction of P0.9154 per kWh over the past two months and a net decrease P0.2315 per kWh since the start of the year.
Lower generation charge pulled down overall rates
The generation charge for August went down by P0.1944 to P6.5812 per kWh from P6.7756 per kWh last month due to the decrease in charges from Power Supply Agreements (PSAs), which more than offset increases in charges from Independent Power Producers (IPPs) and the Wholesale Electricity Spot Market (WESM).
PSA charges registered a reduction of P0.4273 per kWh as this month’s rate no longer included recovery of deferred generation costs for the April bill. Higher excess energy of some PSAs, which are priced at discount, also contributed to the decrease.
On the other hand, IPP charges increased by P0.4213 per kWh with the continued rise in international fuel prices. The underlying Malampaya natural gas price increased by 15% starting this quarter, reflecting recent spikes in world crude oil prices. Power suppliers that have pass-through adjustments in Malampaya fuel – namely, First Gas-Sta. Rita, First Gas-San Lorenzo, and First Natgas-San Gabriel – accounted for 44% of Meralco’s supply during the period. Reduced use of more expensive alternative fuel by First Gas plants mitigated further increase in IPP charges.
Meanwhile, charges from the WESM remained high, registering an increase of P0.0433 per kWh due to tight supply conditions in the Luzon grid. Despite the reduction in demand, the grid was placed on Yellow Alert on July 5 due to insufficient operating reserves after the forced outage of several large power plants. In addition, persistently high spot market prices triggered the imposition of the secondary price cap almost 27% of the time.
PSAs, IPPs, and WESM accounted for 52%, 43%, and 5%, respectively, of Meralco’s energy requirement for the period.
Refund of distribution-related charges continues; rate cut contributed to lower rates
The implementation of distribution-related refunds totaling P48.3 billion as ordered by the Energy Regulatory Commission (ERC) continues to temper customers’ monthly bills. This is equivalent to total refund rate of P1.8009 per kWh for residential customers.
Also contributing to the overall rate reduction for August was the reduction in Meralco’s distribution charge, equivalent to P0.0360 per kWh for typical residential customers.
This followed the ERC Decision dated 16 June 2022 on Meralco’s final Interim Average Rate which the company received on 13 July 2022. This Decision reduced the final average distribution rate for the Lapsed Period (July 2015 to June 2022) from P1.3810 to P1.3522 per kWh, to be reflected as lower Distribution, Supply and Metering charges for all Meralco customers beginning this August.
Prior to this adjustment, Meralco’s distribution charges were unchanged since the reduction in July 2015.
Transmission and other charges
The transmission charge for residential customers had an increase by P0.0235 per kWh. Taxes and other charges, meanwhile, registered a net decrease of P0.0018 per kWh.
The collection of P0.0025 per kWh representing the Universal Charge-Environmental Charge remains suspended as ordered by the ERC.
Pass-through charges from generation and transmission are paid to the power suppliers and the system operator, respectively, while taxes, universal charges, and Feed-in Tariff Allowance (FIT-All) are all remitted to the government.
Customers urged to practice electrical safety and energy efficiency
With the ongoing rainy season, Meralco advises its customers to practice safety measures and prepare for floods or typhoons. Customers are urged to charge mobile phones, flashlights, and other important gadgets or rechargeable appliances. During typhoons, use rubber boots and gloves for added protection. In case of flooding, switch off circuit breakers and make sure electrical wires and devices are dry before touching them. If outlets or appliances got drenched, have a licensed electrician check these before using.
Meralco also empowers its customers to continue practicing energy efficiency. Customers can know how much their gadgets and appliances consume through the Appliance Calculator on the Meralco Mobile App, as this will help them stay in control and better manage their monthly consumption.