By Euan Paulo C. Añonuevo, Reporter

Consumers in Manila Electric Co.’s (Meralco) franchise area will continue to enjoy falling electricity rates in September as a result of reduced rates charged by the giant utility’s power suppliers.
From P4.10 per kilowatt-hour in August, Meralco’s generation charge will go down to P4.02 per
kilowatt-hour this month, or a decrease of P0.08 per kilowatt-hour.

The recent reduction will lower the bills of residential customers consuming 100 kilowatt-hours by P8. The reduction will be double at P16 for those consuming 200 kilowatt-hours.

With the cumulative P1 per kilowatt-hour reduction in the generation charge over the past five months, the September 2009 bills of Meralco residential customers are roughly 14-percent to 15-percent lower compared with the rates in the April 2009 billing period.

The generation charge is the component of consumers’ electricity bills that reflects Meralco’s average buying rate from its suppliers—the state-owned National Power Corp. (Napocor), independent power producers First Gen Corp. and Quezon Power Philippines Ltd. and the Wholesale Electricity Spot Market (WESM).

The generation charge is a “pass-through” cost, meaning this is only billed by Meralco in behalf of the power suppliers.

Downward trend

The decline in Meralco’s generation charge marks the sixth straight month consumers will see decreasing electricity rates.

“Generation charge has been on a general downward trend for the past months, and if we compare generation charge now from five months ago, it would register an accumulated P1 per kilowatt-hour reduction,” said Ivanna de la Peña, Meralco vice president and utility economics head.

The decrease in generation charge was attributed to the increased volume of power obtained by Meralco from the spot market, where prices have been maintaining low levels.

The utility’s purchases from the spot market, at a rate of P2.43 per kilowatt-hour, increased to 15.80 percent in August compared to 8.80 percent in July.

Also, the power Meralco sourced from Napocor decreased to 30.40 percent from 36.20 percent, while private power companies supplied 53.70 percent of its requirements over the same period.

Officials of the Philippine Electricity Market Corp., the state-administered agency overseeing the
Wholesale Electricity Spot Market, earlier said that the low spot-market rates were brought about by low demand because of the global financial crisis and improved efficiency in the power sector resulting from the privatization of a number of Napocor plants.

Meralco serves greater Metro Manila, including the provinces of Bulacan, Rizal, Cavite and parts of Laguna, Batangas and Quezon. It is the largest power-distribution utility in the Philippines serving 4.63 million customers.