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A gift sealed with a kiss from Meralco

Take it as a sweet Valentine’s Day present from the Manila Electric Company as it announced a downward adjustment of power rates. The rates downgrade is a continuation of the downward spiral since last year as the power distributor gifts its customers with affordable electricity this Season of Love.



Indeed, Meralco is showing a big heart by consistently finding ways to shower power users in its franchise areas with benefits to mitigate the impact of the lingering effects of the global Covid-19 crisis. Since 2020, Meralco power rates decreased by more than P1 per kWh.

“The February generation charge at P4.41 per kilowatt hour is 4 centavos lower than January’s generation rate. It is also lower than last year’s generation costs,” Meralco vice president and head of corporate communications Joe Zaldarriaga said.

The overall rate for a typical household decreased by P0.0704 per kWh, from last month’s P8.7497 per kWh to P8.6793 per kWh this month, an equivalent to a decrease of around P14 in the total bill of residential customers consuming 200 kWh.

This month’s overall rate is also P0.1830 per kWh lower than February 2020’s rate of P8.8623 per kWh.

The reduction in the generation cost is due to the lower fixed charges from the supply agreements of Meralco.

The increase in IPP charges due to lower average plant dispatch was not enough to cause generation costs to go up.

Spot market rates also increased due to higher average plant capacity on outage based on the sharing of the energy requirements. PSA, IPP and WESM provided 53.4 percent, 39.5 percent and 7.1 percent, respectively. There are also movements in other charges, particularly in transmission for the residential customers, which also registered a very slight reduction of 1 cent per kilowatt hour due to lower ancillary service charges, while the taxes and other charges also registered a net decrease.

Meanwhile, the UC, EC amounting to 0.0025 per kilowatt hour remains suspended as per the directive of the regulator.

Compared to Meralco’s rate last year, it is 18 centavosper-kilowatt-hour lower. So, compared to the previous month and also compared to year-ago levels, Meralco customers will see a reduction in their rates this February.

This month’s rate still includes the Energy Regulatory Commission (ERC)-approved adjustments for Meralco’s pass-through over/underrecoveries for the period of January 2017 to December 2019.

In an Order released 29 December 2020, ERC directed Meralco to refund over recoveries in transmission and other charges over a period of approximately three months until fully refunded and to collect an under recovery in the generation rate for approximately 24 months until fully collected.

Meralco implemented the ERC-approved adjustments starting the January 2021 billing. The initial impact to residential customers is a net refund of around P0.1150 per kWh.

Meanwhile, the disconnection notice that is being released by Meralco only pertains to those who are consuming 101 kilowatt hours and up because, in the advisory of government, those who are consuming 100 kilowatt-hours and below are not included in the disconnection of the various distribution utilities and the co-ops in the country. “Those who received a disconnection notice — those who consumed 101-kilowatt hour and up — we will try to find a way to assist and help in terms of ensuring that their service will not be disconnected. But, of course, we will take that on a caseto-case basis, since this does not cover any general guideline.”

How does Meralco forecast demand for 2021 amid the existing market conditions?

“We need to see how the various factors will move, as we’ve been trying to explain in the past few months that generation costs are the biggest drivers of the rate movements,” Meralco vice president and head of Utility Economics Lawrence Fernandez said.

The generation costs are influenced by many factors, like the cost of fuel, exchange rate and the condition of the power plants.

This month, Meralco saw more plant outages for January compared to December, which is why Meralco saw an increase in the Spot Market charges. Meralco also saw the costs of Malampaya increase when it was updated to reflect the increase in world crude oil prices.