CUSTOMERS of Manila Electric Co. (Meralco) should expect a reduction in their September electricity bills following a drop in the latter’s power supply cost.
From P5.37 per kilowatt-hour in August, Meralco’s generation charge slipped by nearly P0.17 to P5.21 per kilowatt-hour this month, the utility said in a statement.

The generation charge is the cost of power Meralco sources from power suppliers. The tariff, which averages almost 60 percent of the customer’s average monthly power bill, is entirely a pass through charge and does not accrue or go to the utility.

The country’s largest power distribution utility attributed the reduction in generation cost primarily to the lower cost of electricity purchased from the Wholesale Electricity Spot Market (WESM).

From P9.70 per kilowatt-hour, the cost of electricity purchased by Meralco from the WESM went down by P1.63 to P8.08 per kilowatt-hour.

Also, the rate of Quezon Power Philippines Ltd. (QPPL), an independent power producer (IPP) selling to Meralco, went down by P0.37 per kilowatt-hour due to an improvement in its dispatch or utilization level from 77 percent to 90 percent last month.

These reductions in the rates of WESM and QPPL more than offset the increases in the rates of state-owned National Power Corp. (Napocor) and IPP First Gen Corp. of the Lopez Group.

Napocor’s rate went up because of the higher share of purchases during peak periods while First Gen’s increase went up because of higher fuel cost.

“Nevertheless, [First Gen] plants, along with QPPL, continued to be Meralco’s lowest cost source of supply,” Meralco said.

The power firm said the decrease in generation charge this month will offset the reported 3 centavos per kilowatt-hour rate increase approved by the Energy Regulatory Commission to allow the company to recover past costs.