Meralco to cut power rates for May

By Alvin Elchico, ABS-CBN News

Posted at May 07 2014 03:13 PM | Updated as of May 07 2014 11:13 PM

MANILA, Philippines – Instead of the expected spike in electricity rates, the Manila Electric Co. (Meralco) has announced a reduction in pass-through charges in May due to lower transmission, system loss and subsidy charges.

Overall, Meralco is implementing a P0.05 per kilowatt hour (kWh) reduction for May, which translates to a P5 decrease in the electricity bill of 101 kWh users, around P10 for 200 kWh users, around P15 for 300 kWh users, almost P20 for 400 kWh and P24 for 500 kWh users.

According to Meralco, generation charges went up by P0.07/kWh and taxes by P0.02/kwh, but was offset by lower transmission and other charges for an overall result of reduction of P0.05/kWh.

Meralco explained that while prices at the spot market spiked to around P28/kwh, it minimized its exposure to the market at 3.4 percent from last month's 3.9 percent.

An earlier estimate pegged the estimated increase for May at P1.72/kwh due to higher prices at the spot market. A follow-up estimate brought it down to P0.44/kwh.

But Meralco said its interim power supply agreement (IPSA) with three power producers also helped bring down the generation charge as it limits their exposure to the spot market.

When asked if the generation charge will continue to go down up to June, Meralco said it is not sure since power demand is still expected to peak in the third or fourth week of May that is expected to reach 8,600 megawatts.

Meanwhile, the Energy Regulatory Commission's secondary cap, designed to further mitigate soaring electricity prices at the spot market could have further slashed the generation charge as the cap would have kicked in when WESM prices reached P28/kwh in April.

From the earlier limit or cap of P32/kwh, prices at the spot market will further be brought down to a secondary cap which is a little over P6/kWh once trading price settles at P8 and P0.20 over a 72-hour period or 3 days straight.