Meralco cuts rates

August 10, 2020

ANOTHER downward adjustment of power rates was implemented by Manila Electric Company (MERALCO) this August, the fourth straight month of downward adjustments.

In a statement issued by Meralco yesterday the overall rate for a typical household decreased by P0.2055 per kilowatt hour (kWh) from last month’s  P8.6966 per kWh to P8.4911 per kWh this August.  This is equivalent to a reduction of around P41 in the total bill of residential customers consuming 200 kWh.   

According to Meralco, with five straight months of generation rate reduction, and a total rate decrease of more than one peso per kWh since the start of the year, this month’s overall rate is significantly lower than that of August 2019, which was P9.5674 per kWh. This month’s overall rate is also the lowest in nearly three years, since September 2017. 

Decrease in WESM prices and natural gas repricing lead to lower Generation Charge  .From P4.3344 per kWh in July, the generation charge decreased by P0.2103 per kWh to P4.1241 per kWh this August. 

The main drivers for lower generation charge this August were the reduction in charges from the Wholesale Electricity Spot Market (WESM) and the Independent Power Producers (IPPs). 

Because of the reduced power demand in its service area during the community quarantine period, MERALCO continued to invoke the FM provision in its PSA with First Gen Hydro Power Corporation (FGHPC). This August, the FM claim totalled about P82 million, equivalent to customer savings of P0.0285 per kWh in the generation charge.  For the past 5 months, the savings from FM claims totalled around P1.9 billion. 

MERALCO’s distribution, supply, and metering charges, meanwhile, have remained unchanged for 61 months, after these registered reductions in July 2015. MERALCO 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 like the Universal Charges and the FIT-All are remitted to the government.