Lower temperatures this rainy season will likely lead to reduced power rates in July, according to the Manila Electric Co. (Meralco).
“It the present trend of lower spot market prices continue, this will be reflected in the July generation charge (but) we’ll have to see other components like PSAs (power supply agreements) and IPPs (independent power producers) behave. We also need to see how foreign exchange moves,” said Lawrence Fernandez, Meralco vice president and head of utility economics department, in a briefing last Friday.
Fernandez said demand in the wholesale electricity spot market (WESM) has been declining from last month’s peak.
However, power rates in Metro Manila will go up for the second consecutive month in June with the completion of distribution-related refunds.
The P0.4183 per kilowatt hour (kWh) upward rate adjustment this month brings overall power rates of Meralco to P11.9112 from May’s P11.4929 per kWh. This is equivalent to an increase of around P84 in the total bill of residential customers consuming 200 kWh monthly.
Meralco said the completion of the last distribution-related refund in May equivalent to P0.8656 per kWh for residential customers caused the upward impact in June bills.
From March 2021 to May 2023, the company implemented four Distribution Rate True-Up adjustments totaling P48.3 billion which translated to about P1.8009 per kWh refund for residential customers.
“These refunds benefitted Meralco’s customers over the past two years as these helped temper increases in electricity bills at a time of financial distress and uncertainty for many,” said Jose Ronald Valles, Meralco head of regulatory management office, in a statement.
The company said if not for the drop in generation charge, the increase in overall power rates could have been higher.
Meralco said generation charge went down from P7.6697 per kWh in May to P7.2502 per kWh this month due to lower costs from PSAs and IPPs.
This month’s generation charge no longer includes recovery of deferred generation cost for the March bills.
The company said charges from PSAs and IPPs decreased mainly due to improved average plant dispatch and lower coal prices that mitigated an increase in WESM charges due to tight supply conditions in Luzon.
Meralco’s transmission and other charges this month, registered a net decrease of P0.0278 per kWh while collection of feed-in tariff allowance is suspended until the August billing month in accordance with a resolution from the Energy Regulatory Commission.
