Lower Power Rates this July
MANILA, PHILIPPINES, 11th July 2022 – The Manila Electric Company (Meralco) announced today that the overall rate for a typical household went down by P0.7067 per kWh to P9.7545 per kWh from P10.4612 per kWh last month. This is equivalent to a decrease of around P141 in the total bill of a residential customer consuming 200 kWh.
This month’s reduction effectively reversed all increases in the overall power rates since the start of the year.
Distribution-related refund offsets generation charge increase
The overall rate reduction was due to the Energy Regulatory Commission’s (ERC) Decision to recalculate the difference between the Actual Weighted Average Tariff (AWAT) and the final Interim Average Rate (IAR) of P1.3522 per kWh during the Lapsed Period of July 2015 to June 2022, following a downward adjustment in Meralco’s Regulatory Asset Base for the 3rd Regulatory Period. The Decision dated June 16, 2022, directed Meralco to implement an additional Distribution True-Up refund totaling P21.8 billion for a period of 12 months or until the amount is fully refunded.
This is equivalent to a refund of P0.8656 per kWh for residential customers and will appear as a separate line item called “Dist True-up 4” in the power bills starting this July.
“As a highly regulated entity, Meralco’s rates undergo a review and confirmation process to make sure they are fair and reasonable. The immediate implementation of the ERC Decision was able to more than offset the impact of higher generation charge this month to the benefit of our customers,” Atty. Jose Ronald V. Valles, Meralco Head of Regulatory Management, said.
Generation charge up this month
The generation charge for July went up by P0.2166 to P6.7756 from the P6.5590 per kWh registered the previous month.
Charges from the Wholesale Electricity Spot Market (WESM) increased by P3.9649 per kWh amid tight supply conditions in Luzon. Forced outage of several power plants resulted in the National Grid Corporation of the Philippines (NGCP) placing the Luzon grid on Yellow Alert from June 20 to 22. A Red Alert was also declared on June 18 due to the tripping of the NGCP Hermosa-BCCP 230 kV lines 1 and 2, which isolated several power plants. The secondary price cap was triggered 35.71% of the time, the highest incidence of secondary price cap imposition since the start of the year.
Charges from Power Supply Agreements (PSAs) also went up by P0.3186 per kWh. The Peso depreciated by 5% this month, the steepest decline in the Peso’s value since June 2003, affecting around 32% of PSA costs that are dollar denominated. The continued increase in international coal prices also contributed to the increase in the PSA rate.
Meanwhile, charges from Independent Power Producers (IPPs) decreased by P0.4669 per kWh. With the shutdown of 1,200 MW Ilijan power plant beginning June 4, First Gas Sta. Rita and San Lorenzo received additional natural gas supply from Malampaya, leading to decreased usage of more expensive liquid fuel. This more than offset the effects of the Peso’s depreciation on IPP charges.
This month’s generation charge also includes the last installment of deferred generation costs for the April bill, equivalent to an add-on of around P0.13 per kWh in the generation charge.
PSAs, IPPs, and WESM accounted for 50%, 43%, and 7%, respectively, of Meralco’s energy requirement for the period.
Transmission and other charges
The transmission charge for residential customers inched down by P0.0012 per kWh, while taxes and other charges also registered a net decrease of P0.0565 per kWh.
The collection of P0.0025 per kWh representing the Universal Charge-Environmental Charge remains suspended as ordered by the ERC.
Meralco reiterated that it only earns from distribution, supply, and metering charges which have remained unchanged since the reduction in July 2015.
Meanwhile, pass-through charges from generation and transmission are paid to the power suppliers and the system operator, respectively, while taxes, universal charges, and Feed-in Tariff Allowance (FIT-All) are all remitted to the government.
Customers urged to practice electrical safety and energy efficiency
With the ongoing rainy season, Meralco advises its customers to practice safety measures and prepare for floods or typhoons. Customers are urged to charge mobile phones, flashlights, and other important gadgets or rechargeable appliances. During typhoons, use rubber boots and gloves for added protection. In case of flooding, switch off circuit breakers and make sure electrical wires and devices are dry before touching them. If outlets or appliances got drenched, have a licensed electrician check these before using.
Meralco also empowers its customers to continue practicing energy efficiency. Customers can know how much their gadgets and appliances consume through the Appliance Calculator on the Meralco Mobile App, as this will help them stay in control and better manage their monthly consumption.