Philippines: Meralco may cut power rates this month

Philippines: Meralco may cut power rates this month

Customers of Manila Electric Co. (Meralco) are likely to see a reduction in
power rates this month due to lower generation charge - the biggest
component in electricity bills.

"We may see the possibility of lower electricity rates this month following
a slight increase in December," Meralco spokesperson Joe Zaldarriaga said.

He said charges from the Wholesale Electricity Spot Market (WESM) as well as
the peso-dollar exchange rate have been stable for the December supply
month.

Data from the Bangko Sentral ng Pilipinas (BSP) showed the peso-dollar
exchange rate averaged P49.815:$1 in December versus the P49.155:$1 average
in November.

Meanwhile, spot market operator Philippine Electricity Market Corp. (PEMC)
earlier said it expects WESM prices to continue its downtrend in December
until February this year because of ample power supply and lower demand due
to cooler temperature.

Apart from WESM prices and the foreign exchange factor, the cost of power
sold under power supply agreements (PSAs) are also seen to register a
decline, Zaldarriaga said.

"While spot market costs and dollar to peso exchange rate were stable, we
may see a decline in rates from our power supply agreements or PSAs as a
result of annual reconciliation of outage allowances as provided for in the
contracts approved by the regulators," he said.

Under the PSAs, the Energy Regulatory Commission (ERC) has approved an
annual outage allowance - forced or unforced - for each plant.

After accounting for the unutilized outage allowance of the power plants for
the full calendar year, the capacity charges normalize in January of the
succeeding year.

In December, electricity rates went up by 10-centavo per kilowatt-hour (kWh)
mainly driven by higher generation charge due to peso depreciation affecting
costs.

Meralco said the increase in rate is equivalent to an overall rate of P8.36
per kWh, which is still lower than the 2016's P8.61 per kWh rate.

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Link to Original Article:
http://www.philstar.com/business/2017/01/09/1660820/meralco-may-cut-power-ra
tes-month

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com