Meralco logs 3% tariff decline due to lower generation charges

The average tariff billed to customers by power utility giant Manila Electric Company (Meralco) had been down by 3.0 percent in the first half of the year, and that was mainly attributed to the decline in the generation charge component of its pass-on rates.

During a virtual briefing with the media, Atty. Jose Ronald V. Valles, first vice president and regulatory management head of Meralco, specified that the overall retail rates of the power firm softened to ₱7.92 per kilowatt hour from ₱8.19 per kWh in the same six-month stretch last year.

“Lower generation charges – which represented 57 percent of the total retail price – were accounted mostly for the drop,” the company stressed.

Of all the rate components, it had been the feed-in-tariff allowance (FIT-All charges) for renewable energy (RE) capacities that had climbed significantly because of the higher FIT-All implemented starting January this year at ₱0.0983 per kWh from ₱0.0495 per kWh.

Valles added “the collection of FIT-All was also continuous throughout the first half of 2021, as compared with the two-month suspension last year in April and May 2020, in consideration of the COVID-19 situation.”

As further noted, the generation charge component declined by 1.3 percent on average to ₱4.50 per kWh, and that was mainly traced to the “decrease in charges from the Wholesale Electricity Spot Market (WESM) – coupled with lower fuel prices and the peso appreciation.”

The power firm further pointed out “the average retail rates went in contrast to the higher inflation recorded during the first half the year,” – entailing then that even if the costs of the other basic commodities have been rising, the rates billed by Meralco had been on downtrend.

Citing data from the Philippine Statistics Authority (PSA), Meralco expounded that inflation rate within January to June this year essentially settled at 4.4 percent; rising from 2.5 percent in the same period in 2020.

Additionally, Meralco stated that “the implementation of transmission over-recoveries refund between January and April 2021 coupled with the lower ancillary service charges dragged transmission charges lower by 7.5 percent to ₱0.73 per kWh.” The transmission charges account for roughly 9.0 percent of the total tariff passed on to ratepayers.

In the case of system loss charges in the bill, this was likewise lower by 6.8 percent in the last six months, and that translated to ₱0.28 per kWh average reduction in the rates.

Meralco explained that the lower system loss charge had been “due to the implementation of system loss over-recoveries refund between January and April, coupled with lower generation and transmission costs.”

The distribution charges, on the other hand, had just been marginally up by 0.1 percent; and that was mainly registered due to the increase in residential sales because of the imposition of enhanced community quarantines.