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Meralco rates down significantly by P0.9879/kWh this April

April 9 ------ There is a major silver lining after all to the scorching blow of the summer months, as the electricity rates of utility giant Manila Electric Company (Meralco) will be reduced significantly by P0.9879 per kilowatt hour (kWh) in its April billing cycle.

As announced by the power firm, its overall tariff will be pared to P10.9518 per kWh this month versus P11.9397 per kWh in March – and that had been mainly due to the decline in the generation charge component in the rates; as well as on the deferred costs of ancillary services of the power grid operator. According to Meralco Vice President and Head of Corporate Communications Joe R. Zaldarriaga, “the significant reduction in this month’s overall electricity rate more than wiped out the increases in power rates for the first quarter of the year.” That downtrend in Meralco’s pass-on rate will result in P198 reduction in the bills of end-users that are in the average consumption threshold of 200 kWh; and P296 for those in the 300kWh usage base.

The paradoxical twist of a rate cut in this peak of a summer season, instead of the earlier projection of increases; had been due to the suspension of price settlements at the reserve market; as well as the downswing in prices of liquefied natural gas (LNG); and higher availability of gas from the Malampaya field, primarily for the gas plants of First Gen. As emphasized by Meralco, the generation charge had been trimmed to P0.3613 per kWh; and that contributed to a great degree in the overall drop in the rates because that line item accounts for roughly 60% of the pass-on costs in the electric bills. In particular, invoiced charges from its contracted independent power producers (IPPs) dipped by a hefty P1.0701 per kWh; while capacity purchases from power supply agreements (PSAs) dwindled by P0.5733 per kWh.

The IPP costs downtrend, as noted by the utility firm, had been mainly “due to the non-use of liquefied natural gas (LNG) by Sta. Rita and San Lorenzo and continued withholding of incremental Malampaya gas costs for First Gas-Sta. Rita under its new gas sale and purchase agreement (GSPA).” Meralco explained the cost tumble had been mainly due to a recent order from the Energy Regulatory Commission (ERC) enforcing that “the Malampaya pricing under First Gas-Sta. Rita’s old GSPA and only landed costs of LNG shall be passed through until separate ERC approval of full costs.” For capacity purchases from PSAs, the cost decline drivers had been “lower fuel costs of South Premier Power Corp. (SPPC) under the emergency PSAs with Meralco, as well as that of San Buenaventura Power Ltd. (SBPL).” Conversely, the company’s exposure in the Wholesale Electricity Spot Market (WESM) ended in price settlements uptick P1.0114 per kWh on account of “tighter supply conditions in the Luzon grid.”

Meralco indicated that “average demand went up by 618 megawatts while average capacity on outage also increased by 473 MW. “ Relative to such developments, it specified that the secondary price cap of P6.245 per kWh in the spot market had been enforced 7.0% of the time, due to sustained high settlement price or the other cost components, the utility firm conveyed that transmission charges had been pared by P0.4665 per kWh; while taxes and other charges had been lower by P0.1601 per kWh. Amid this month’s rate cut, Zaldarriaga continually pleaded with consumers “to continue practicing energy efficiency especially during summer when consumption historically increases anywhere from 10 to 40% due to warmer temperatures.” On Meralco’s supply sourcing, the bulk had been from its PSAs with 46% share in its supply portfolio last month; while procurements from contracted IPPs hovered at 29 %; and the balance of 25% had been from the spot market. 



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