Power rates slightly rise in October as oil firms cut fuel pump price

By Lenie Lectura - October 9, 2017

https://businessmirror.com.ph/power-rates-slightly-rise-in-october-as-oil-firms-cut-fuel-pump-price/

Electricity prices are on the rise this month, while fuel pump prices will be reduced after two straight weeks of upward adjustments.

The Manila Electric Co. (Meralco) said on Monday it will implement a P0.0345-per-kilowatt-hour (kWh) power price increase, bringing the overall rate from last month’s P9.2491 per kWh to P9.2836 per kWh. The slight rate increase this month amounts to a P6.91 increase in the total bill of a typical residential household consuming 200 kWh.

The October rate increase is mainly due to the P0.1777 per kWh increase in generation charge, which was offset by the reduction in other charges. Generation charge is the largest component of an electric bill.

Overall generation charge increased this October by P0.1777 per kWh, from P4.5378 per kWh in September to P4.7155 per kWh this month, primarily due to the completion of the 2014 to 2016 Meralco-petitioned refund in the previous month, which lowered the September generation-charge rate compared to the October generation charge.

On September 7 Meralco filed a manifestation with the Energy Regulatory Commission (ERC), informing the commission of the necessary process of reconciliation, which resulted from the implementation of the refund through a fixed rate.  The reconciliation was reflected last month as a reduction of P0.1136 per kWh in the overall generation charge. Reconciliation for other components, which includes transmission and system- loss charges, subsidies and corresponding taxes, reflected a net collection of P0.1257 per kWh.

Cost of power from power-supply agreements  and independent  power producers (IPPs) registered slight increases due to higher fuel prices and lower average plant dispatch, respectively. The shares of PSAs and IPPs to Meralco’s total requirements stood at 43 percent and 45 percent, respectively.

Charges from the Wholesale Electricity Spot Market (WESM), meanwhile, decreased by P0.4382 per kWh, as lower power demand during the September supply month mitigated the impact of four yellow- alert declarations by the National Grid Corp. of the Philippines (NGCP). The share of WESM purchases to Meralco’s total requirements this month was 12 percent.

This month’s generation charge also includes the Power Sector Assets and Liabilities Management Corporation’s (PSALM) net recovery of certain incremental costs incurred by the National Power Corp.

It can be recalled that the ERC approved the collection of approximately P21.5 billion from customers of affected distribution utilities over 60 months. For customers in the Meralco service area, this is equivalent to a net add-on of around 1.2 centavos per kWh in the generation charge to be remitted to PSALM.

Transmission charge of residential customers decreased by P0.0593 per kWh, while taxes and other charges also went down by P0.0839 per kWh this month. The lower charges were partly due to the effect of last month’s reconciliation of the ERC-approved refundable amount.

Meralco’s distribution, supply  and metering charges, meanwhile, have remained unchanged for 27 months, after the registered reductions in July 2015. Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the NGCP.

Meanwhile, oil firms are implementing a price reduction in petroleum products on Tuesday.

Pilipinas Shell and Seaoil said separately that gasoline prices will be reduced by P0.50 per liter. kerosene by P0.85 per liter and diesel by P0.40 per liter effective 6 a.m. of October 10.

“This is to reflect movements in the international petroleum market,” Seaoil said.

Other oil firms are expected to follow suit.