Manila: Lower transmission rates and generation charges have enabled the Manila Electric Company (Meralco) to implement a PHP0.3557 per kilowatt hour (kWh) reduction in power rates for December. In a briefing held on Tuesday, Meralco Vice President and Head of Corporate Communications Joe Zaldarriaga explained that transmission charges contributed most to the rate reduction at PHP0.1462/kWh. This was followed by a decrease in generation charges, primarily from Independent Power Producers (IPPs) at PHP0.1358/kWh, taxes at PHP0.0457/kWh, and other charges such as subsidies, universal charges, system loss, and Feed-In Tariff (FIT-All) at PHP0.0280.

According to Philippines News Agency, the reduction in generation charges was largely driven by the decrease in natural gas prices, improved power plant dispatch, and the strengthening of the Philippine peso against the U.S. dollar. Zaldarriaga noted that the majority of the operating expenses of IPPs are pegged against the U.S. dollar, making domestic power rates susceptible to fluctuations.

With these changes, a household consuming an average of 200kWh per month will see a reduction in their power bill of approximately PHP71 for December, compared to the previous month. Zaldarriaga expressed hope that the rate adjustment would provide relief to customers during the holiday season.

During the same briefing, Meralco Vice President and Utility Economics Analyst Larry Fernandez explained that the company uses the foreign exchange level on the end-of-month banking day to compute power rates. He noted that a weakening peso results in upward pressure on generation charges, while a strengthening peso, as currently experienced, leads to a downward effect.

Looking ahead to January, Fernandez stated that factors such as overseas fuel prices, the foreign exchange rate, and the supply-demand situation will influence power rates. However, he added that no significant events are expected to impact these factors in the near future.