May generation rates fall as market improves

Electricity generation rates, a key part of consumer power bills, fell across most regions in May, easing costs after a sharp increase in April.

The Energy Regulatory Commission (ERC) said on Wednesday that the drop was driven by improved spot market conditions, lower imported fuel prices, and a stronger peso.

In the National Capital Region (NCR), preliminary data from the ERC showed that the average generation rate fell to P7.5 per kilowatt-hour (/kWh) in May from P7.8/kWh in April, which had been the highest level since 2013.

Rates also dropped in many other regions, except for MIMAROPA and the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), which recorded slight increases to P8.9/kWh and P5.8/kWh, respectively.

Among the areas that saw declines, the Cordillera Administrative Region (CAR) held steady at P5.3/kWh. Region I fell from P6.2 to P5.8/kWh, Region II from P6.1 to P5.6/kWh, and Region III from P5.9 to P5.6/kWh. CALABARZON dropped from P5.8 to P5.3/kWh.

In the Visayas, Region VI fell from P7.1 to P6.2/kWh, Region VII from P6.5 to P6.3/kWh, and Region VIII from P6.9 to P6.2/kWh.

Mindanao also recorded lower rates: Region IX from P6.3 to P6.0/kWh, Region X from P6.9 to P6.5/kWh, Region XI from P6.7 to P6.2/kWh, Region XII from P5.8 to P5.3/kWh, and CARAGA from P6.6 to P6.2/kWh.

According to the ERC, the decline was mainly due to a wider supply margin in the Wholesale Electricity Spot Market (WESM). The system-wide average supply rose to 22,218 megawatts (MW) in May from 19,648 MW a year earlier. Meanwhile, demand slipped to 15,169 MW from 15,688 MW due to a shorter dry season.

“The continuing decline in generation rates since 2023 results from improved general market conditions and increased supply in the system, as well as the Commission’s diligent enforcement of rules and more timely action on filings with the ERC,” ERC Chairperson and CEO Monalisa C. Dimalanta said.

“Even as we see these improvements, the ERC will not relax its proactive stance of close monitoring, particularly of global fuel prices, bilateral contracting and market behavior, to ensure the delivery of least-cost electricity to consumers,” she added.

Global cost drivers also supported the price drop. Indonesian coal prices averaged $115.8 per metric ton in May, the lowest so far this year, while the peso strengthened to P55.6 per US dollar, its best level this year.

ERC data showed that the average generation cost and average residential electricity rate have each dropped by P2.4/kWh since January 2023, moving closely in line over the last two years.