Lower pass-through charges pulled down overall rates
Driving the overall rate reduction this month are lower generation and transmission charges.
This month’s generation charge went down by P0.31 per kWh to P7.47 per kWh, primarily due to lower charges from the Wholesale Electricity Spot Market (WESM) and Independent Power Producers (IPPs).
WESM charges decreased by P1.14 per kWh as a result of the improved supply situation in the Luzon Grid while IPP charges went down by P0.96 per kWh because of higher average IPP dispatch and the appreciation of the Peso to its strongest level since December 2023, which affected around 97 percent of IPP costs that were dollar-denominated.
These reductions tempered the P0.19 per kWh increase in charges from Power Supply Agreements (PSAs), which in turn was due to lower PSA dispatch. The stronger Peso, affecting around 56 percent of PSA costs that were dollar-denominated, mitigated further increase in PSA rate.
WESM, IPPs, and PSAs accounted for 26 percent, 33 percent, and 41 percent respectively of Meralco’s total energy requirement for the period.
Also contributing to this month’s rate cut was the P0.2970 per kWh decrease in the transmission charge for residential customers. Other charges, including taxes, similarly registered a net decrease of P0.1385 per kWh.
Pass-through charges for generation and transmission are paid by Meralco to the power suppliers and the grid operator, respectively; while taxes, universal charges, and Feed-in Tariff Allowance are all remitted to the government.
Meralco’s distribution charge, on the other hand, has not moved since the P0.0360 per kWh reduction for a typical residential customer beginning August 2022. Customers also continue to benefit from the ongoing implementation of the distribution-related refund equivalent to around P0.20 per kWh for residential customers.