Households can expect lower electricity bills this month. Manila Electric Co.(Meralco) announced a rate reduction of P0.7499 per kilowatt-hour (kWh) in May, ending a three-month streak of power rate hikes.

The adjustment brings the overall electricity rate down to P12.2628 per kWh, from P13.0127 per kWh in April.

“Residential customers consuming 200 kWh will see a decrease of around P150 in their total electricity bill this month. The rate reduction is due to lower generation and transmission charges,” Meralco vice president and head of Corporate Communications Joe R. Zaldarriaga said during a media briefing on Tuesday. 

The generation charge, which accounts for the bulk of a household’s electricity bill, dropped by P0.3144 per kWh to P7.4651 per kWh this month, mainly driven by a P1.1424 per kWh decrease in charges from the Wholesale Electricity Spot Market (WESM) and a P0.9555 per kWh drop from Independent Power Producers (IPPs).

WESM charges declined as supply conditions improved on the Luzon grid, with average capacity on outage falling by 1,475 megawatts (MW) — more than enough to offset a 1,372 MW increase in peak demand.

Better dispatch, stronger peso

IPPs also benefited from better dispatch and the strengthening of the Philippine peso, which impacted the 97 percent of dollar-denominated IPP charges.

The declines helped temper a P0.1884 per kWh increase in Power Supply Agreement charges, which rose due to lower PSA dispatch. The stronger peso also mitigated further PSA cost increases, with around 56 percent of PSA costs linked to the dollar.

WESM, IPPs and PSAs accounted for 26 percent, 33 percent, and 41 percent, respectively, of Meralco’s total energy supply for the period.