Power rates are expected to decline further this month amid improved supply and the impact of the net settlement surplus reduction, an executive of Manila Electric Co. said over the weekend.
“We see rates as being stable or may in fact even see a reduction for this month as a result of improvements in the overall power supply situation. There were no incidents of red and yellow alerts that may have impacted on rates,” said Meralco assistant vice president and spokesman Joe Zaldarriaga.
Power rates declined for the fourth consecutive month in August. The average rate for a typical household consuming 200 kilowatt-hours fell to P9.5674 per kWh last month from P9.9850 per kWh in July.
“We also expect to implement the net settlement surplus or NSS which WESM [Wholesale Electricity Spot Market] will include as a reduction in their billing. This was due to the recent order of the ERC [Energy Regulatory Commission] and a re-computation by PEMC [Philippine Electricity Spot Market] which subsequently resulted in a refund and reduced power costs,” Zaldarriaga said.
Meralco sources a portion of its power supply from the WESM, the country’s trading floor of electricity.
The ERC previously ordered PEMC to make the necessary adjustments to the NSS allocations and corresponding settlement calculations for the June 2018 to May 2019 billing months. NSS exists if the total payment to customers exceeds the total payment to generation companies at the WESM where PEMC is the governing body.
“It is likely we will see a reduction in the generation charge this September. Despite the depreciation of the peso, which will put upward pressure on charges from IPPs [independent power producers], there are two factors that can offset the effect of the peso’s weakening. One is the improved supply situation. The other is the Net Settlement Surplus refund being implemented by PEMC, as directed by the ERC,” Meralco head of utility economics Lawrence Fernandez said.
Fernandez said the power supply was stable in the preceding month. “There were no yellow or red alerts during the August supply month so that we expect WESM charges to go down,” Fernandez said.
Meralco earlier said the fourth straight month of electricity rate decline in August represented a total downward adjustment of almost P1 per kWh since May.
Meralco attributed the lower rates to the lower charges at the WESM. Meralco sourced 11 percent of its July power supply from the WESM.
The generation charge for August went down to P4.9620 per kWh from P5.4227 per kWh in July.
Meralco said it was not earning from the pass-through charges such as the generation and transmission charges.
