POWER distributor Manila Electric Co. (Meralco) expects a reduction in the cost of power purchased from suppliers for the January billing cycle due to lower electricity prices in the spot market, a company official said Thursday.
“There are indications that generation costs on our customers’ bills may decline in January,” Meralco Vice President and Head of Corporate Communications Joe R. Zaldarriaga said in a Viber message.
Generation costs typically exceed 50% of the monthly electricity bill.
Mr. Zaldarriaga attributed the potential reduction to lower prices in the Wholesale Electricity Spot Market (WESM) due to an “improved supply situation in the Luzon grid as both average peak demand and average outage capacity declined in the supply month of December.”
Preliminary data from the Independent Electricity Market Operator of the Philippines (IEMOP) showed that the average WESM price in Luzon fell 23% to P3.26 per kilowatt hour (kWh) due to higher power supply and lower demand.
IEMOP is the operator of the WESM, the trading floor where energy companies can purchase power when their long-term contracted power supply is insufficient for customer needs.
“We expect the lower generation charge to lead to an overall reduction in electricity rates this month,” Mr Zaldarriaga said.
The possible drop in energy rates for January would be the first reduction this year and comes after two consecutive months of increases.
In December, the overall Meralco rate increased by P0.1048 per kWh to P11.9617 per kWh, compared to P11.8569 per kWh in November, largely due to higher generation costs.
Generation costs increased by P0.1839 per kWh, reflecting higher costs resulting from the WESM and power supply agreements.
Meralco is the main power distributor for Metro Manila and nearby areas, covering 39 cities and 72 municipalities and supplying power to approximately eight million customers.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partially owned by PLDT Inc.
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