FOR the third consecutive month, electricity rates are set to go down in July despite the 13 yellow-alert warnings issued in the Luzon grid last month.
The Manila Electric Co. (Meralco) said Monday that overall electricity rates for a typical household consuming 200 kilowatt-hours will drop to P9.9850 per kWh this July from last month’s P10.0918 per kWh.
The downward adjustment of P0.1068 per kWh will mean a decrease of around P21 in the total bill. The third straight month of electricity rate decrease represents a total downward adjustment of around P0.57 per kWh since May.
Generation charge, which makes up bulk of the electricity bill, increased to P5.4227 per kWh from P5.4158 per kWh, mainly on account of higher charges from the Wholesale Electricity Spot Market (WESM).
However, charges attributed to the WESM were mostly offset by the lower charges of independent power producers (IPPs) and stable charges of power supply agreements (PSAs).
WESM charges rose by P1.8794 per kWh due to tight supply conditions in the Luzon grid. Plant capacity on outage increased as demand for power in the grid peaked at 11,344 MW in June. Meralco said the share of WESM to its supply needs went down to 8.1 percent.
With limited supply, the number of days on red alert, as declared by the National Grid Corp. of the Philippines (NGCP), increased to five from two in May.
A red alert notice is raised when there is severe power deficiency and zero contingency reserve, while a yellow alert means thin power reserves. The company also said the cost of power from IPPs fell by P0.2239 per kWh largely due to the appreciation of the peso. About 97 percent of IPP charges are dollar-denominated. Cost of power from PSAs is stable with a slight increase of P0.0414 per kWh. IPPs and PSAs provided 41.4 percent and 48.2 percent of Meralco’s supply needs, respectively.
Transmission charges went down by P0.0788 per kWh, primarily due to lower ancillary service charges.
Taxes and other charges also dropped by P0.0349 per kWh. This includes a reduction of P0.0731 per kWh, in compliance with the Energy Regulatory Commission’s (ERC) directive to implement a one-time decrease in rates for reset cost adjustment and to reflect the same as a separate line item in electric bills.
This month’s rate also includes an increase in the Universal Charge-Stranded Contract Cost amounting to P0.0543 per kWh to be recovered for 12 months, which was recently approved by the ERC.
Meralco’s distribution, supply and metering charges have remained unchanged for 48 months, after these were cut in July 2015.
The company 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, while payment for the transmission charge goes to the NGCP. Taxes and other public policy charges are remitted to the government.
Image credits: Roy Domingo