Meralco rate seen flat in August billing

By Myrna M. Velasco – August 3, 2020, 10:00 PM
from Manila Bulletin

The customers of Manila Electric Company (Meralco) can rest easy in this month’s billing cycle as the utility firm is anticipating that its all-inclusive pass-on rate will be flattish or there could even be a slight reduction depending on the final billing of its power suppliers.

“The overall rate movement looks to be flattish due to improved power situation for the July supply month,” Meralco Spokesman Joe Zaldarriaga has noted.

The other factors that could potentially pull down electricity tariffs this month would be the strengthening value of the Philippine peso versus the US dollar; as well as the quarterly repricing of Malampaya natural gas prices.

Meralco procures significant portfolio of its supply from power plants fueled by gas from the Malampaya field – hence, the quarterly reckoning of the gas price could have a softening impact on its pass-on cost to the consumers.

Zaldarriaga qualified “there is a possibility for a minimal decrease in overall power rates and generation charge because of these factors.”

On the supply situation, the Meralco executive noted “there were no yellow alerts in July; and power supply was more stable compared to June – with lower demand in the grid as well.”

He indicated that the steady state of power supply in Luzon last month “may contribute to lower WESM (Wholesale Electricity Spot Market) prices and a decrease in generation charge.”

And if the impact of the quarterly repricing of the Malampaya gas will be factored in, plus the reinforced value of the local currency, such elements could contribute to the overall lowering of the generation charge for the August billing.

The generation charge accounts for roughly 55 to 60-percent of the overall pass-on cost in the electric bills, hence, a downtrend in that cost component could be substantially felt by consumers.

Meralco’s electricity rates had been on declining drift in the past months –and this was precipitated by

lower generation charge due to slowdown in demand; in addition to the company’s efforts on invoking force majeure claims with its supplier-companies; that in turn had resulted in lower rates for its customers.

This year’s plague of the coronavirus pandemic had shifted consumption upswing on to residential end-users; hence, the rate reductions in the past months had been a valuable help in managing power budgets.