Manila Electric Co. customers will see lower electricity bills this month as the power distributor is set to implement a P0.1852 per kilowatt-hour (kWh) rate reduction — breaking a two-month streak of increases.

The rate cut reduces the overall rate for a typical household to P13.0851 per kWh this September, down from P13.2703 per kWh in August.

“For residential customers consuming 200 kWh, they will see a reduction of P37 in their total electricity bill. We hope that, along with relatively lower consumption during this period, this rate cut will bring relief to our customers,” Meralco vice president and head of Corporate Communications Joe R. Zaldarriaga said at a media briefing on Wednesday.

Drop in generation charges

Zaldarriaga said the rollback was mainly driven by a P0.2603 per kWh drop in generation charges, reflecting lower costs from Independent Power Producers (IPPs) and Power Supply Agreements (PSAs).

Charges from IPPs dropped by P1.3459 per kWh, while those from Power Supply Agreements (PSAs) decreased by P0.3660 per kWh.

Meralco noted that the declines were driven by a stronger peso and lower international fuel prices.

The local currency’s appreciation directly reduced about 99 percent of IPP costs and 57 percent of PSA costs, which are dollar-denominated.

The reductions helped offset higher charges from the Wholesale Electricity Spot Market (WESM), which went up by P0.3785 per kWh.

The increase was due to higher average demand in the Luzon grid, up by 182 megawatts (MW), and a 132 MW rise in capacity on outage.

Additional costs also came from the start of collections for contract price adjustments of Sual Power Inc. (SPI) and South Premiere Power Corp. (SPPC).

The Energy Regulatory Commission approved P5.1 billion in recoveries, to be collected over six months beginning September, equivalent to about P0.26 per kWh each month.

For September, Meralco sourced 65 percent of its supply from PSAs, 29 percent from IPPs, and 6 percent from WESM.

Meanwhile, transmission charges rose by P0.1130 per kWh due to higher ancillary service costs from the Reserve Market. Taxes and other charges, however, registered a net decrease of P0.0379 per kWh.

Meralco noted that its distribution charge has remained unchanged since August 2022, when it was cut by P0.0360 per kWh for a typical residential customer.

Consumers also continue to benefit from a distribution-related true-up adjustment, equivalent to a P0.2024 per kWh reduction.

With the rainy season ongoing, Zaldarriaga urged households to observe electrical safety, especially in flood-prone areas.