Households can expect lower electricity bills this month as the 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.

“For residential customers consuming 200 kWh, they 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.

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

The declines helped temper a P0.1884 per kWh increase in Power Supply Agreement (PSA) 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.

Meanwhile, residential transmission charges declined by P0.2970 per kWh, helped by reduced Ancillary Service charges under the Reserve Market and National Grid Corporation of the Philippines (NGCP) procurement agreements.

Additionally, NGCP-related adjustments collected in previous months were no longer included in May’s billing. Other charges, including taxes, showed a net decrease of P0.1385 per kWh.

Zaldarriaga also clarified that pass-through charges, such as generation and transmission fees, are paid directly to power suppliers and grid operators, while taxes and regulatory fees go to the government.

Notably, Meralco’s distribution charge has remained unchanged since it was reduced by P0.0360 per kWh in August 2022. Customers continue to benefit from a distribution-related true-up adjustment of P0.2024 per kWh, which remains in effect.