Lower transmission, generation charges
Lower transmission charges sustained the overall electricity rate reduction this January with the residential transmission rate dropping by P0.10 per kWh to P1.0368 per kWh mainly due to lower ancillary service charges incurred by the National Grid Corporation of the Philippines (NGCP) from its Ancillary Service Procurement Agreements and the Reserve Market.
Also contributing to this month’s rate cut was the lower generation charge, which decreased by P0.0171 per kWh to P7.7471 per kWh owing to lower charges from the Wholesale Electricity Spot Market (WESM) and Power Supply Agreements (PSAs).
Charges from WESM went down by P1.1898 per kWh due to improved supply situation in the Luzon Grid with the reduction in both average peak demand and capacity on outage by 367 MW and 237 MW, respectively.
Charges from PSAs also decreased by P0.0516 per kWh as the San Buenaventura Power Ltd. Co. (SBPL) plant went back online, following its scheduled outage last month. Meanwhile, charges from Independent Power Producers (IPPs) increased by P1.4879 per kWh due to higher fixed fees of Sta. Rita following the Energy Regulatory Commission’s (ERC) confirmation of First Gas Power Corp.’s computation method under the interim extension of its contract with Meralco. The peso’s depreciation against the US dollar also contributed to the increase since 99 percent of IPP costs were dollar-denominated.
WESM, PSAs, and IPPs accounted for
7 percent, 71 percent, and 22 percent respectively, of Meralco’s total energy requirement for the period.
Further pulling down the overall rates this January was the P0.0837 per kWh net reduction in taxes and other charges.
These downward movements in the bill components were able to offset the implementation of the Green Energy Auction Allowance (GEA-All) which begins this month, in accordance with a recent directive of the ERC. The approved GEA-All is equivalent to P0.0371 per kWh.
The GEA-All applies to all on-grid end-users and is intended to cover the differential amount required to fully compensate GEA-eligible plants, with collections remitted to the National Transmission Corporation (TransCo).
Pass-through charges for generation and transmission are paid to the power suppliers and the grid operator, respectively, while taxes, universal charges, and renewable energy subsidies 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 in August 2022.
