Meralco rates down by P0.2728/kwh in May

Published May 7, 2019, 10:00 PM By Myrna M. Velasco

https://business.mb.com.ph/2019/05/07/meralco-rates-down-by-p0-2728kwh-in-may/

Despite the P3.5355 per kilowatt hour (kwh) hike in charges from the Wholesale Electricity Spot Market (WESM) during the month, the lower contract costs of Manila Electric Company (Meralco) had been able to reduce its overall rates in this May billing cycle by P0.2728 per kwh.

For households in the base consumption level of 200-kilowatt hours, the aggregate reduction in their bills will be to the tune of P55.

Factoring in all cost components, the utility firm’s billed cost for the month had been at P10.2866 per kwh from the month-ago level of P10.5594 per kwh.

Meralco noted that its procurement of supply from contracted independent power producers (IPPs) and corresponding power supply agreements (PSAs) had decreased by significant P0.7544 per kwh and P0.5143 per kwh, respectively.

Had not been for the spikes in WESM prices, the utility firm indicated that the cost reduction to consumers would have been heftier. The positive twist to its lower contract costs from IPPs and PSAs then lies on the fact that it was able to dilute what should have been higher costs from the spot market.

Beyond the contract costs’ softening, Meralco has further cited “the strengthening of the peso against the US dollar and lower fuel prices (for coal and Malampaya) as the intervening factors that had pulled down the final generation charge in this high demand month of summer.

Thus, for the generation charge component in the rate, this was on a downtrend of P0.0814 per kwh to P5.5508 per kwh vis-à-vis the previous billing cycle’s P5.6322 per kwh.

“The generation charge decrease is primarily due to lower charges from the IPPs and PSAs,” Meralco stressed, adding that the volume of procurement from the IPP contracts hovered at 43 percent; and PSAs at 45 percent; and the balance of 12 percent from the WESM.

Meralco further qualified that roughly 98 percent of IPP charges and 72 percent of PSA charges are dollar-denominated, qualifying that for the price of natural gas from Malampaya, which accounts for about 64 percent of Meralco’s supply, it had been down this month as a result of the quarterly repricing “to reflect lower crude oil prices in the world market.”

For the other cost components, the transmission charge was on downswing by P0.0808 per kwh “due to higher system load factor”; while taxes and other charges declined by P0.1106 per kwh.

Relative to the WESM charges, Meralco affirmed that it had climbed by a significant P3.54 per kwh “because of tight supply conditions in Luzon resulting in seven instances of yellow alerts and seven instances of red alerts” as declared by system operator National Grid Corporation of the Philippines.

Nevertheless, the anticipated impact of the spiky spot prices had been offset by the lower costs of the utility firm’s procurements from other power suppliers.