Meralco rates to go down

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CONSUMERS are likely to heave a sigh of relief, at least for now, after distribution utility Manila Electric Co. (Meralco) announced on Monday that this month’s power rates will go down.

Despite warmer temperatures that could lead to high demand for electricity, Meralco said overall rates went down by P0.095 per kilowatt hour (kWh) compared to February 2015 rates.

For a typical household consuming 200 kWh, this is equivalent to a decrease of around P19 in its electricity bill.

Meralco said the decrease in power rates was caused by lower cost of generation that resulted from a decrease in Power Supply Agreement (PSA) rate and other charges such as distribution, system loss and subsidies.


According to the utility, generation charge, or the portion of the bill that goes to the generation companies or power producers, decreased by P0.029 per kWh from P5.238 to P5.209.

This was driven by a 30-centavo reduction in the average rate of Meralco’s PSAs for the February supply month owing to higher dispatch of the plants under the PSAs.

“PSAs’ share to Meralco’s total power requirements went up from 49 percent to 54 percent,” the company said.

This reduction, however, was dampened by an increase of P1.14 per kWh in average price of the Wholesale Electricity Spot Market (WESM) and P0.18 per kWh in the case of Independent Power Producers (IPPs).

WESM’s share to Meralco’s total power requirements rose from 4 to 4.5 percent because of Quezon Power Philippines Ltd.’s (QPPL’s) maintenance outage.

The share of IPPs, on the other hand, dropped from 47 percent to 40.5 percent mainly because of the QPPL outage.

Despite lower rates by Santa Rita and San Lorenzo, the average IPP rate was pulled up by QPPL.

The balance of Meralco’s power requirements was accounted for by the Interim Power Supply Agreements (IPSAs).

In addition, transmission charge also went down by P0.045 per kWh because of lower ancillary charges.

Other charges, which include system loss charge and subsidies, registered a decrease of P0.010 per kWh.

These reductions resulted in corresponding decreases in taxes (VAT and local franchise tax) of P0.011 per kWh.

Meralco’s distribution charge, however, remained unchanged and has been at the same level since July 2014.

The utility 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, IPPs and IPSAs.

Payment for the transmission charge goes to the National Grid Corporation of the Philippines.

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

Meanwhile, in the wake of the Malampaya deepwater gas-to-power facility shutdown from mid-March to mid-April, power plants relying on the natural gas it supplies will need to shift to more expensive liquid fuel.

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