Meralco expects electricity rates to drop in February

posted January 28, 2021 at 08:05 pm by Alena Mae S. Flores
https://manilastandard.net/business/power-technology/345590/meralco-expects-electricity-rates-to-drop-in-february.html

Rates of Manila Electric Co., the country’s largest electricity retailer, are expected to go down in February on improving demand that will spread the fixed costs of suppliers, an executive said Thursday.

Meralco spokesman and vice president Joe Zaldarriaga said the utility was still waiting for all the final billings from several power suppliers and would announce the final rates in early February.

“The initial data suggests that the generation costs for February have a very strong likelihood of a decrease due to higher demand in the Luzon grid in January as compared to December,” Zaldarriaga said.

He said Luzon peak demand in January increased compared to December 2020 and “this swing in demand means that the fixed costs from power suppliers may be spread over higher energy volume resulting in lower effective rates to consumers, compared to last month.”

“Given this, charges from PSAs [power supply agreements] also are projected to decrease,” Zaldarriaga said.

He said the net overall power rate reduction since the start of 2020 was still more than P1 per kilowatt-hour.

“Our Meralco rates are at the lowest levels in three years, and may possibly continue to go down in the coming months,” he said.

Meralco announced an increase in the overall rate for a typical household by P0.2744 per kWh in January to P8.7497 per kWh from P8.4753 per kWh last year.

The overall rate increase was driven by higher generation charges.

The January generation charge amounted to P4.4574 per kWh, or P0.3058 higher than the December generation charge of P4.1516 per kWh.

The rates of Meralco’s PSAs and independent power producers also increased by P0.2723 and P0.2428 per kWh, respectively as Luzon peak demand in December decreased by 252 MW to 9,634 MW from 9,886 MW amid cooler temperature and more non-working holidays.

Demand for power in Meralco’s franchise fell to its lowest level in December since the lifting of the enhanced community quarantine in May.

The lower demand led to fixed costs from power suppliers being spread over lower energy volume, resulting in higher effective generation rates to consumers.

Meanwhile, rates from the Wholesale Electricity Spot Market (WESM), the country’s trading floor of electricity went down by P0.6135 per kWh.

Meralco sourced 56.4 percent from PSAs, 37.3 percent from IPPs and 6.3 percent from the WESM for supply requirements in December.