The Manila Electric Company (MERALCO) announced today a second straight month of downward adjustment for power rates as the overall rate for a typical household decreased by P0.3598 per kWh, from last month’s P8.6793 to P8.3195 per kWh this March. This is equivalent to a decrease of around P72 in the total bill of residential customers consuming 200 kWh.
This month’s rate is the lowest since August 2017.
Distribution Rate True-Up refund to begin this March
MERALCO will start implementing the Distribution Rate True-Up refund this month, which is the primary reason for this month’s rate reduction. The Energy Regulatory Commission (ERC) provisionally approved MERALCO’s proposal to refund around P13.9 billion over a period of 24 months or until the amount is fully refunded. This amount represents the difference between the Actual Weighted Average Tariff and the ERC-approved Interim Average Rate for distribution-related charges for the period July 2015 to November 2020. For residential customers, the refund rate is P0.2761 per kWh and will appear in customer bills as a line item called “Dist True-Up”.
This month’s rate also still includes the ERC-approved adjustments for pass-through over/under-recoveries for the period January 2017 to December 2019. In an Order released 29 December 2020, ERC directed MERALCO to refund over-recoveries in transmission and other charges over a period of approximately three months and to collect an under-recovery in the generation rate for approximately 24 months. MERALCO implemented the ERC-approved adjustments starting January 2021. The impact to residential customers, from the months of January to March 2021, is a net refund of around P0.1150 per kWh.
Lower generation charge contributed to the overall power rate decrease
March 2021 generation charge is P4.3749 per kWh, P0.0403 lower than February’s P4.4152 per kWh.
The reduction was due to the higher share of supply from the Wholesale Electricity Spot Market (WESM), which registered the lowest charge among suppliers. Despite an increase in Luzon peak demand from 9,162 MW to 9,574 MW, charges from the WESM remained relatively stable at P2.4609 per kWh. WESM share was up from 7.1 % last month to 11.7% this month.
The low WESM charges offset increases in costs from Power Supply Agreements (PSA) and Independent Power Producers (IPPs) of P0.0175 per kWh and P0.1338 per kWh, respectively. The higher PSA and IPP charges were the result of the Peso’s depreciation and lower average plant dispatch. The shares of PSAs and IPPs went down this month to 52.5% and 35.8%, respectively, from 53.4% and 39.5%, respectively, last month.
Movements in Other Charges
Transmission charge for residential customers inched up by P0.0022 per kWh, while taxes and other charges registered a net decrease of P0.0456 per kWh.
Meanwhile, collection of the Universal Charge-Environmental Charge amounting to P0.0025 per kWh remains suspended, as directed by the ERC.
MERALCO’s distribution, supply, and metering charges, meanwhile, have remained unchanged for 68 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.
Meralco provides energy efficiency tips for customers
Historically, the summer season may bring an increase in residential electricity consumption by 10% to 40% versus average consumption during the cool months of January and February. As temperature increases, appliances that have compressors, like air conditioners or refrigerators, will have to work harder. Electric fans are also used longer than usual, and often at “high” setting to beat the summer heat.
According to Meralco FVP and Chief Commercial Officer Ferdinand O. Geluz, “this summer, you have the power, as Meralco encourages its customers to continue practicing energy efficiency initiatives at home to be ready in managing their consumption.”
Geluz added, “these simple everyday activities include cleaning your air-con filters every 2 weeks to ensure optimal performance, setting your aircon’s thermostat to 25oC to maximize efficiency, making sure you use the right aircon size for your room, making sure your refrigerator’s air vents are not blocked to keep its compressor from working harder, unplugging appliances when not in use to avoid phantom load, using a power strip to make it easier and more convenient to turn appliances off simultaneously with just one switch, and maximizing natural light during daytime.”