Power rates in Metro Manila will go down this month as distribution-related refunds managed to offset hikes in the total generation charge, according to the Manila Electric Co. (Meralco).
The P0.7067 per kilowatt hour (kWh) downward rate adjustment brings overall power rates of Meralco to P9.7545 from last month’s P10.4612 per kWh. This is equivalent to a decrease of around P141 in the total bill of residential customers consuming 200 kWh monthly.
Meralco said this month’s reduction effectively wiped out all increases in the overall power rates since the start of the year.
The overall rate reduction was due to the Energy Regulatory Commission’s (ERC) decision to recalculate the difference between the actual weighted average tariff and the final interim average rate 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 third regulatory period.
ERC’s 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 in the power bills starting this month.
“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,” said Jose Ronald Valles, Meralco head of regulatory management, in a statement.
If not for the refund, power rates could have increased as 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 as forced outage of several power plants and the 35.71 percent trigger rate of secondary price cap at the spot market.
Meanwhile, charges from power supply agreements (PSAs) also went up by P0.3186 per kWh as the peso depreciated by 5 percent this month, affecting around 32 percent of PSA costs that are dollar denominated.
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 and the additional gas supply experienced by the Sta. Rita and San Lorenzo natural gas-fired power plants that led to decreased usage of more expensive liquid fuel.
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.
As for the transmission charge for residential customers, Meralco said it 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’s interim distribution rates comprised of distribution, supply and metering charges, the only bill component paid to the company also remained at P1.381 per kWh since July 2015. – Jed Macapagal
