Customers of the Manila Electric Co. or Meralco can heave a sigh of relief this Christmas month as power rates go down by approximately 80 centavos due to lower generation charges.

Meralco, the country's largest power distributor, announced on Monday that overall power rates this December slightly declined to P11.26 from P12.05 per kilowatt-hour or kWh in November.

The adjustment translates to savings of as much as P159 in the total electricity bill of residential customers consuming 200 kWH monthly.

Meralco spokesperson Joe Zaldarriaga said the December rates cut more than offset the increases implemented in the past two months.

Based on the data provided by Meralco, generation charge this month went down by 66 centavos to P6.5332 from P7.1938 per kWh last month due to lower charges from the Wholesale Electricity Spot Market or WESM and Independent Power Producers or IPPs.

Spot mart price cuts

WESM charges slid by P2.76 per kWh with the improved supply situation in the Luzon grid as demand went down by around 421 megawatts or MW and average plant capacity on outage decreased by about 679 MW.

Lower spot market prices, on the other hand, prevented the imposition of the secondary price cap in November.

Charges from IPPs, per Meralco, went down by roughly 48 centavos per kWh due to First Gas plants' reduced use of more expensive liquid fuel and lower international coal prices.

Also contributing to this was the peso appreciation, which affected around 97 percent of IPP costs that were dollar-denominated.

On the other hand, there was a slight upward adjustment of about 8 centavos per kWh in charges from Power Supply Agreements or PSAs due to lower average PSA dispatch.

WESM, IPPs, and PSAs accounted for 20 percent, 32 percent and 48 percent, respectively, of Meralco's total energy requirement for the period.

Transmission charges, taxes and other charges also registered a net reduction of P0.1355 per kWh.

The collection of the Feed-In Tariff Allowance (FIT-All), at the rate of P0.0364 per kWh, remains suspended as directed by the Energy Regulatory Commission.

Meralco's distribution charge, meanwhile, has not moved since the P0.0360 per kWh reduction for a typical residential customer beginning in August 2022.

Fair rates

In a separate study, the International Energy Consultants or IEC described Meralco's rates as "fair and reasonable."

In its cross-country comparison of 46 energy markets, including two American states, the IEC said Meralco's average tariff in 2022 ranked 21st and 3 percent below the global average.

It added that if subsidized markets were excluded, the power distributor's tariff would even be 13 percent lower than the world average.

"Considering that the Luzon power market is unsubsidized, and the majority of the electricity is produced using imported fuel, Meralco appears to have done a very good job of minimizing tariff increases," IEC cited.

As such, the IEC proposed the need to focus on facilitating investment in new generation capacities to meet demand growth.

Given the country's reliance on imported fuel, it said that urgent attention should be given to accelerating the development of indigenous renewable energy sources.