December power rates to go down by 19 centavos


POWER rates will go down this month by as much as 19 centavos per kilowatt hour (kWh) because of lower charges from the retail market.

In a statement issued on Tuesday, power distributor Manila Electric Co. (Meralco) said a reduction of 17 centavos per kWh in the generation charge, which registered its lowest level for the year, warrants the power rate adjustment.

The amount is equivalent to a decrease of around P38 in the bill of a typical household consuming 200 kWh.

At P4.94 per kWh, this month’s generation charge marks the first time since October 2013 that the generation charge went below P5 per kWh.

This is the second month that power prices have gone down. Combining last month’s and the December’s adjustments, overall rates are down by P0.60 per kWh since October 2014.

The reduction in the generation charge was mainly driven by lower charges from the Wholesale Electricity Spot Market (WESM), which registered a reduction of P1.70 per kWh because of normal operations of power plants during the November supply month.

The supply situation in Luzon improved especially after Sual’s Unit 1 (647 MW) came back online after a month-long maintenance shutdown in October 2014.

In addition, Meralco said WESM charges decreased as a result of completion in October of adjustments from prior months, which include additional Must-Run Unit (MRU) compensation for Malaya and the secondary cap additional compensation for the supply months of May and June 2014.

These account for around P0.09 of the P0.17 per kWh decrease in generation charge this month.

The lower WESM charges offset the slight P0.10 per kWh and P0.03 per kWh increases in the average rates of the Independent Power Producers (IPPs) and power plants covered by Power Supply Agreements (PSAs), respectively.

In terms of share to Meralco’s total power requirements for the November supply month, WESM, IPPs, and PSAs accounted for 4, 43 and 53 percent, respectively.

Contributing also to the overall downward adjustment in the bills to households is the P0.014 decrease in taxes and P0.023 cumulative decrease in the system loss charge and subsidies.

Transmission charge, on the other hand, increased by P0.017 per kWh because of higher ancillary service charges.

Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges.

Payment for the generation charge goes to the power suppliers such as the plants selling to Meralco through the WESM and under the PSAs, as well as the IPPs.

Payment for the transmission charge, meanwhile, goes to the National Grid Corp. of the Philippines.

Of the total bill, only the distribution, supply and metering charges accrue to Meralco.


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