Meralco sees lower electric rates in June
By Lenie Lectura – June 8, 2020
from Business Mirror
AHEAD of the June electricity rate announcement, the Manila Electric Co. (Meralco) expects lower rates this month.
“There is a likelihood of a rate reduction this June,” said Meralco Utility Economics Head Lawrence Fernandez in a text message.
The utility firm will hold a virtual press briefing on Monday to announce the June rates.
Rates for May stood at P8.7468 per kilowatt hour, lower by P0.2483 per kWh, from April’s P8.9951 per kWh. This was mainly because of lower generation charge as Meralco invoked the Force Majeure (FM) provision in its Power Supply Agreements (PSAs) for the duration of the lockdown.
Fernandez explained that the June rates could be lower because of the suspension of the Environmental Charge component of the Universal Charges (UC) and the continued FM savings.
“While collection of the FiT-All will resume, this will probably be offset by the suspension of the Environmental Charge component of the Universal Charges and by the savings on fixed costs on generation supply due to the continued invoking of Force Majeure last May.
“May’s FM savings will be smaller, however, when compared to April’s savings of more than P800 million, as only a portion of the May supply month was under ECQ,” he said.
Meralco explained last month that the significant reduction in power demand in its service area during the enhanced community quarantine (ECQ) period prompted it to invoke the FM provision in its PSAs, thereby reducing fixed charges for generation capacity that would have been charged by suppliers.
April’s generation charge reflected a P129-million reduction in fixed costs due to Meralco’s FM claim. In May, the FM claim totaled P877 million, equivalent to savings of P0.3452 per kWh. For both April and May billing months, the reduction due to FM amounted to more than P1 billion.
Demand in the Luzon grid is starting to pick up, he said. Meralco recorded that demand jumped to more than 10,400 megawatts, its highest level since the ECQ was imposed. When the ECQ started in the second half of March, demand fell to less than 8,000 MW.
“We will continue to monitor the demand whether or not this will justify [invoking] Force Majeure,” said Fernandez, when asked if this would continue in the months to come.
Meanwhile, Meralco can conclude this month the meter readings of all its customers, which was halted since March 16 when the Covid-19 lockdown began.
Fernandez said Meralco was able to conduct meter readings of 60 percent of its customers last month.
“There 2.8 million customers whose meters we weren’t able to read last May, but we’re targeting to finally read this June. This means we were able to actually read 60 percent of meters last May,” he said.
Meralco drew flak as many customers complained of high electricity bills. Officials explained that the spike in the May electricity bills was “reasonable” since this already included a portion of the customer’s actual consumption for previously estimated months.
It explained that some of the March and all of the April bills were estimated based on the preceding three months—December, January, and February—which were likely to be significantly lower than actual consumption for these months.
With the resumption of meter readings, Meralco can now render the bill based on the actual consumption and the corresponding bill adjustments.
Fernandez said the so-called bill shock could have been avoided if smart meters had been installed.
“If we had in place this mechanism, we would not have estimated the consumption during the quarantine period, for simple reasons like we would not have sent meter readers out because consumption can already be determined remotely,” he said.
Meralco targets to have 3.3 million of its customers shift to smart meter service over the next eight years.
The smart meters can handle prepaid and postpaid electricity services. Subscribers with smart meters can manage their electricity usage and budget through consumption information, alerts and notifications.
Meralco has already deployed 102,000 smart meters for its prepaid electricity service. By the first half of 2021, Meralco would have installed a total of 145,000 smart meters, 38,000 more for the PRES or the Prepaid Electricity Service, and 5,000 for postpaid.
Beyond the 145,000 smart meters, Meralco continues to work with the Energy Regulatory Commission (ERC) for the approval of 1 million more smart meters, which are to be deployed over a period of three years.
Meralco ended 2019 with 6.88 million customers.
