By Business World, July 9 2019

Image Credit to Business World

HOUSEHOLDS in Metro Manila and surrounding areas can expect their electricity bills to go down for the third straight month in July, as Manila Electric Co. (Meralco) announced a P0.1068 per kilowatt-hour (/kWh) drop in overall rate as a slight increase in generation charge covering the June supply month was offset by a fall in other costs.

In a statement on Monday, the country’s biggest electricity distributor said a typical household consuming 200 kWh could see a reduction to P9.9850/kWh this month from P10.0918/kWh in June or a P21.36 cut in the total monthly bill. Those using 300 kWh, 400 kWh and 500 kWh can expect reductions of P32.04/kWh, P42.72/kWh and P53.40/kWh, respectively.

“The third straight month of electricity rate decrease represents a total downward adjustment of around P0.57/kWh since May 2019,” the listed company said.

It said the generation charge for the month had slightly risen to P5.4227/kWh or by P0.0069/kWh from P5.4158/kWh because of higher charges from the Wholesale Electricity Spot Market (WESM).

However, WESM’s increase was offset by the lower charges of independent power producers (IPPs) and stable charges of power supply agreements (PSAs).

WESM charges rose by P1.8794/kWh because of tight supply conditions in the Luzon grid.

Meralco said plant capacity on outage increased while demand for electricity in the grid peaked at 11,344 megawatts (MW) in June. This resulted in the number of days on red alert, as declared by grid operator National Grid Corporation of the Philippines (NGCP), rose to five from two in May. Also, about a third of the days in June were under yellow alert. NGCP issues alert notices to warn about thinning power reserves. The share of WESM in Meralco’s supply requirements went down to 8.1%.

The cost of power from IPPs shrank by P0.2239/kWh mainly because of the stronger peso. Meralco said about 97% of IPP charges are dollar-denominated. Power charges from PSAs slightly increased by P0.0414/kWh. IPPs and PSAs accounted for 41.4% and 50.5% of the utility’s supply needs, respectively.

The transmission charge for residential customers in June dropped P0.0788/kWh largely due to lower ancillary service charges.

Taxes and other charges fell by P0.0349/kWh, Meralco said, adding that the reduction includes the P0.0731/kWh to comply with the Energy Regulatory Commission’s (ERC) order to implement a one-time decrease in rates.

The ERC earlier directed privately owned power distribution utilities to refund the amount on their unutilized regulatory reset cost, with corresponding interest, to their respective consumers. The cost represents expenses incurred in engaging regulatory experts or consultants when setting and updating electricity rates.

The rate in July also includes a rise in the universal charge-stranded contract cost at P0.0543/kWh to be recovered for 12 months, which was recently approved by the ERC.

Meralco said its distribution, supply and metering charges have remained unchanged for the past “48 months, after these registered reductions in July 2015,” adding that it does not earn from pass-through charges like generation and transmission charges. — VVS