MANILA, Philippines — Consumers reeling from stubbornly high inflation could get a reprieve this month after Manila Electric Co. (Meralco) cut its electricity tariff.
In a statement on Monday, the nation’s largest electricity distributor said the electricity rate reduction in July was due to an order from the Energy Regulatory Commission to Meralco to reimburse costs related to the distribution of an amount of 21.8 billion pesos to customers.
The adjustment, in turn, reduced the overall rate from P0.7067 per kWh to P9.7545 per kWh.
This means that a typical household consuming 200kWh per month will achieve an estimated P141 decrease in their electricity bill that month. The electricity distributor said the reduction was large enough to “effectively reverse” all rate increases since the start of the year.
The refund stems from ERC’s review of the fare components that can be adjusted under the existing rules. Regulators said Meralco must reimburse customers for a period of 12 months or until the amount is fully distributed.
And this is the ERC’s fourth refund directive to Meralco since January last year. Taking into account the last order, the updated total refund for residential consumers is now 1.8009 pula per kWh.
But while the new refund cycle is expected to ease the burden on consumers struggling with rising prices, some customers are already bracing for the implementation of a Supreme Court ruling upholding a rate hike request approved in 2013. by Meralco.
“The immediate implementation of the ERC decision was able to more than offset the impact of the higher production load this month for the benefit of our customers,” said Jose Ronald Valles, Head of Regulatory Management of the company.
Broken down, spot market charges increased by 3.9649 pula per kWh due to tight supply conditions in Luzon following several plant outages. This month, Meralco sourced 7% of the electricity sold to consumers on the spot market, where distributors can buy electricity at prices higher than pre-agreed supply agreements in periods energy crisis.
Similarly, charges for Power Supply Agreements (PSAs), which accounted for 50% of Meralco’s energy needs in July, rose by P0.3186 per kWh, not thanks to the fall in the peso which made 32 % more expensive dollar-denominated PSA costs. The continued rise in international coal prices also contributed to the increase in the PSA rate.
Higher spot market and PSA prices offset a P0.4669 per kWh drop in IPP loads, where Meralco obtained 43% of the power it distributed to its area of franchise.
Transmission costs decreased by P0.0012 per kWh, while taxes and other charges were reduced to P0.0565 per kWh.