By Myrna M. Velasco
Electricity rates for Manila Electric Company (Meralco) customers will be down this February billing, with initial estimates of ₱0.40 to ₱0.50 per kilowatt-hour.
The key factors that pulled down rates for this billing cycle is the implementation of the ₱0.1731 per kWh reduction in the feed-in-tariff allowance (FIT-ALL) for renewable energy capacities; and the stoppage of collection of the ₱0.05 per kWh universal charge for stranded contract cost (UC-SCC) of state-run Power Sector Assets and Liabilities Management Corporation.
PSALM President Irene Joy Garcia said the company’s January collections of UC-SCC would already fully cover the ₱5.117 billion that the Energy Regulatory Commission (ERC) had allowed it to pass-on, hence, the state-run firm gained the leverage of stopping this line item’s collection starting in this month’s billing of consumers.
“PSALM will cease collecting the ₱0.0543 per kWh UC-SCC effective February 2020. This is a relief to power consumers all over the country as they are no longer going to be charged the UC-SCC,” the company said, emphasizing that for those in the 100-kilowatt consumption bracket, they will enjoy overall reduction of ₱5.43 in their bills.
Additionally, there was general softening of prices in the Wholesale Electricity Spot Market (WESM) and generation charges due to cooler temperatures. But it was specified by Meralco that the final reconciliation of the generation pass-on costs will be on the first week of the month, as it still awaits billings from its power suppliers.
Meralco Spokesperman Joe Zaldarriaga said “power prices will go down this February,” noting that this billing month’s tariff drop “will likely be significant and will be on top of the ₱0.41 per kWh key reduction last January.”
He affirmed the FIT-All and universal charge components are the rate cut drivers, and then the generation charge which the utility firm estimated to have been down by roughly ₱0.30 per kWh.
The company executive explained “this is due to the new baseload PSAs (power supply agreements) with a total capacity of 1,200 megawatts that was signed after Meralco’s successful CSPs (competitive selection processes) last year.”
The power supply deals, he said, had been provisionally approved by the Energy Regulatory Commission (ERC) but public hearings still continue onward to the regulator’s rendering of a final verdict on the PSA applications.
The new power supply agreements for the utility firm’s baseload capacity of 1,200MW had been cornered by the energy investment firms of San Miguel Corporation and the Ayala group; while the 500MW peaking capacity by First Gen of the Lopez group.
The baseload capacity PSAs will be for contract duration of 10 years starting December 26, 2019 to December 25, 2029, hence, the off-takes had already started wheeling into Meralco’s load network.
For these contracts, it has been estimated that Meralco customers would be able to enjoy savings of up to ₱9.46 billion in yearly pass-on costs or an equivalent of ₱0.28 per kWh rate reduction.
The biggest component in the tariff being passed on by distribution firms like Meralco is the generation charge, which accounts for 50 to 60 percent; and that is a line item that fluctuates on a monthly basis.