Meralco sees slight drop in January electric bills

By: Amy R. Remo

Philippine Daily Inquirer

11:25 pm | Friday, January 6th, 2012

Consumers of Manila Electric Co., the country’s biggest power distributor, can expect electricity bills to go down this month due to lower demand and stable fuel costs in December.

“We’re expecting a slight reduction in the generation charge [component of the power bill] although we don’t have figures yet. Reduction will mainly be due to lower prices at the wholesale electricity spot market, which we observed from the daily results reported by the Philippine Electricity Market Corp.,” said Larry Fernandez, head of utility economics at Meralco.

“It appears that the generation supply situation has normalized, coupled with slightly lower power demand because of cooler December temperature,” Fernandez added.

He said the distribution utility was expecting stable prices of electricity that it sources from independent power producers (IPPs), namely Quezon Power Philippines Ltd.’s coal-fed facility and the 1,000-megawatt Sta. Rita and the 500-MW San Lorenzo natural gas-fired plants, which are owned by the Lopez-led First Gas Holdings.

“We do not expect major movements in their prices as foreign exchange and fuel costs were relatively stable,” he said.

The final generation charge will be released next week.

Last month, Meralco customers enjoyed a reduction in their electricity bills due to the drop in generation charge by 27 centavos a kilowatt-hour to P5.51. This decline was due to a reduction in WESM prices, which fell by P3.49 a kWh to P9.

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 bill. This goes directly to Meralco’s power suppliers.