Relief for Meralco customers

After hitting historic highs in April, bills of Manila Electric Co. (Meralco) customers this month will go down due to a decrease in generation charge, which represents the cost of power purchased from the utility’s suppliers.


The company said in a statement yesterday that the generation charge to be passed on to Meralco customers this month will be down P1.26 per kilowatt-hour (kWh) "because of lower electricity costs purchased by Meralco [sic] from its suppliers, notably the Independent Power Producers (IPP) and the Wholesale Electricity Spot Market (WESM)."

The generation charge accounts for over half of the cost components of an electricity bill.

Ivanna G. dela Peña, Meralco vice-president and utility economics head, said in a phone interview yesterday that the decrease this month offset the increase last month.

Households consuming 200 kWh a month, which make up the utility’s biggest customer segment at about a third of the total, will see an average decline of P252 in this month’s bill.

In comparison, these households saw an averge P239.80 increase in their April power bills, consisting of a P186 rise due to the P0.93/kWh hike in generation charge and a P53.80 increase due to a P0.269/kWh rise in distribution rates.

Ms. dela Peña said in the statement that prices at WESM declined by P3.90/kWh for the supply month of April, averaging P7.36/kWh from P11.36 the month before.

She said in a phone interview that stable power supply contributed to the lower prices at the WESM, where the utility sourced 15.5% of its power needs in April from 14% the previous month. "Definitely, the presence of more supply due to operation of power plants which were previously offline contributed to the decrease [in prices]. Law of supply and demand is what functions in the spot market," she explained.

Meralco external communications head Joe Zaldarriaga echoed Ms. dela Peña’s statement, saying that "with more plants running close to full capacity, there is more supply to cope with demand, effectively bringing down rates."

The cost of power from IPPs also dropped by P1.24/kWh to P4.59/kWh from P5.83/kWh due to the shift to natural gas by First Gas Power Corp. plants from costlier liquid fuel. "The First Gas plants reverted to the use of natural gas for the entire supply month of April, after using condensate fuel from the second week of February to early March during the maintenance shutdown of the Camago-Malampaya facility," Ms. dela Peña said.

Mr. Zaldarriaga stressed that the utility only passes on the generation cost, saying this "charge can move from month to month based on many factors beyond our control like fuel prices, working condition of the power plants and WESM prices, among others. Should there be adjustments in the generation charge, it is our duty to reflect these changes in the customers’ bills, such as this month’s reduction." -- J. B. F. Santos, BusinessWorld