Meralco generation charge seen below P5.00/kwh in Dec. by Myrna Velasco

Manila Bulletin
by Myrna Velasco
December 8, 2014

Depressed demand plus the impact of downtrend in fuel prices will pull down the generation charge of power utility Manila Electric Company (Meralco) to below P5.00 per kilowatt hour (kwh) this December billing month.

“There’s a strong likelihood that generation charge will fall below P5.00 per kwh for the first time this year,” an executive of the company has hinted. That will be from a slightly higher base of P5.11 per kwh in November billing.

meralco logo copyMeralco is expected to announce the reduction on its rates today (December 9).

Fundamentally, the generation charge account for the biggest component in the overall rates being passed on to end-users.

The scenario this year had been considerably a reversal of the anguish-ridden events of last year when the P4 to P5 per kilowatt hour (kWh) hike in Meralco’s rates in November-December then tangibly came as ‘electric shock’ to its customers.

In a separate message, Meralco assistant vice president Joe Zaldarriaga noted that the company, as of Monday (December 8) was “still waiting for the final and complete information from suppliers.”

He emphasized though that “WESM (Wholesale Electricity Spot Market) results show November load weighted average prices (LWAP) to be lower than October’s.”

Zaldarriaga said cost trends “indicate reduction in the generation cost for December compared to last month.”

With teeming supply, mainly due to lower consumption because of the cold weather, prices in the spot market had also softened in the recent reckoning of the November supply month.

Fuel prices, which are major factors in the life cycle cost of power plant operations, will also contribute to the overall deceleration in the generation charge.

It must be noted that some fuels utilized for fuel generation are indexed to global oil prices – primarily the plants running on natural gas provided by the Malampaya field. So far, prices in the world oil markets have been hitting historic lows.

Additionally, the cost of coal had also been collapsing in the past months – and such could also contribute to the overall cut-back in electricity rates. source