Meralco rates likely to decline in March

Manila Electric Co., the country's largest power retailer, said Monday power rates will likely drop this month after an increase in February on improved plant dispatch and less scheduled outages.

"There are indications that IPPs [independent power producers] and PSAs [power supply agreements] will register improved dispatch levels, which typically lead to a lower generation charge," Meralco spokesman Joe Zaldarriaga said.

Zaldarriaga said there were less scheduled outages in the February supply month, compared inJanuary.

"Masinloc 1 also returned from its scheduled maintenance in January and Sta. Rita and San Lorenzo also saw improved output levels in February," Zaldarriaga said.

Meralco, which has over 5.8 million customers in its franchise area, is set to release the final generation rates this week.

Meralco earlier submitted an explanation to the Energy Regulatory Commission on the P0.42 per kWh rate increase in February.

The distributor said the February power rates reflected the normal power costs compared to the January rates which included computation on the outage allowances of the power plants.

"It is further emphasized that the Epira [Electric Power Industry Reform Act] and its implementing rules and regulations allow the automatic pass through of these charges," it said.

"After the true up of the capacity fees every December of each year to account for the unutilized outage allowance of the power plants for the full calendar year, the capacity charges normalize in January of the following year," Meralco said.

Meralco said for the January billing, generation charges went down by P.049 per kWh brought about by the reconciliation of outage allowances of the Pagbilao, Sual, Calaca and Ilijan power plants.

It said the February billing merely reflected the normal generation costs from the power plants supplying power to Meralco under their respective PSAs.

The PSAs approved by the ERC provide for a forced and unforced outage allowance for each plant. Each of the PSA plants has a fixed capacity fees spread over 12 months by dividing the total by the number of days in a year, less outage allowance to arrive at a daily capacity fee rate.

"Without the effect of the unused outage allowance, the average rate of the PSAs for the January 2016 supply month would have increased by P0.17 per kWh and the generation charge for the February 2016 billing months would have gone down instead by P0.266 per kWh," Meralco said.

It said the increase in the PSA generation costs was tempered by the P0.0071 per kWh reduction in the average rate of the independent power producer plants and the P2.2096 per kWh reduction in the average price at the wholesale electricity spot market.

Meralco said the P0.0821 per kWh increase in the transmission charge was due to the P0.09 per kWh increase in the billings of National Grid Corp. of the Philippines for January supply month due to higher ancillary charges.

"It should be further emphasized that the foregoing charges are pass-through charges which are revenue-neutral to Meralco. Meralco neither earns nor benefits from pass-through charges," Meralco said. The company's distribution charges have remained unchanged since July 2015.

Meralco sourced bulk of its power requirements from the IPPS at 47.2 percent, followed by PSA at 46.7 percent and WESM at 6.1 percent during the January supply month.

Source: Manila Time

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