Meralco rates go down again

Despite the high cost of power generation, customers of the Manila Electric Co. (Meralco) will see a reduction in their June electricity bills because of a decrease in transmission and system loss charges.

Ivanna de la Peña, Meralco utility economics head, on Monday said that overall, residential customers served by the country’s largest power distribution utility will see reduction of around P0.10 a kilowatt-hour in their bills.

“The reduction was caused by a decrease in transmission and system loss charges which declined [by P0.15 a kilowatt-hour and P0.03 a kilowatt-hour, respectively], for residential customers,” she explained.

The lower transmission charge was a result of the zero back-up charge of the National Grid Corporation of the Philippines, which operates the country’s power transmission facilities, arising from the non-availability of back-up capacity for May.

Back-up capacity is one of the ancillary services recovered through National Grid’s billings, which is passed on to consumers by Meralco.

Other ancillary services include load following and frequency regulation, spinning reserve and black start capability.

System loss charges, meanwhile, saw a reduction from the lowering in system loss level from 8.21 percent in March to 8.01 percent in April. The reduction translates into lower system loss rates to Meralco customers.

System loss is a component in electricity bills where utilities are allowed to recover their technical and non-technical losses such as when electricity dissipates over power lines or is pilfered, respectively.

The reduction in the line items in Meralco’s power bills more than offset an increase in generation costs, which rose by P0.18 a kilowatt-hour. This charge is collected by Meralco on behalf of its suppliers.

The increase in Meralco’s generation charge was attributed to the high demand for electricity because of the summer heat. This resulted in higher power costs from the Wholesale Electricity Spot Market (WESM) and the National Power Corp.

Generation charges

Despite this, Meralco expects generation charges to dip in the incoming months with the onset of the rainy season as demand historically drops during cooler weather and hydroelectric power plants are able to operate at a higher efficiency during downpours.

“We expect the hydroelectric plants, which generate much cheaper power, will begin operating at nearly full capacity. The increase in generating capacity combined with lower demand because of the cooler weather is expected to dampen prices in the WESM. Hopefully, these factors can help bring down electricity rates even further,” Joe Zaldarriaga, Meralco external communications head, said.

With the P0.10 a kilowatt-hour reduction, a Meralco residential customer consuming 100 kilowatt-hours will have his bill reduced by around P11 this June. For one consuming 200 kilowatt-hours, the reduction is much higher at about P27, factoring in the attendant reduction in taxes and other bill components. For 300 kilowatt-hours, a Meralco customer will see a bill reduction of around P40.

The decrease in Meralco’s rates is the second straight one it has implemented after its generation charges went down by P1.26 a kilowatt-hour in May. –EUAN PAULO C. AÑONUEVO Reporter, Manila Times