(PHStocks) – Manila Electric Company (MERALCO; PSE: MER) today announced that the Generation Charge for the billing month of January will go down by P0.05 per kilowatthour (kWh), from December’s P5.51 per kWh to P5.46 this month.
Meralco said the Generation Charge declined because of a reduction in the price of power purchased from the Wholesale Electricity Spot Market (WESM). WESM prices fell by P1.85 per kWh, from P9 per kWh in the November 2011 supply month to P 7.14 per kWh in the December supply month.
Meralco said there has been a gradual decline in spot market prices after the normalization of the generation supply situation in the Luzon Grid. It will be recalled that in late October 2011, the grid experienced generation capacity constraints following the maintenance shutdown of the Malampaya natural gas pipeline.
Total energy consumption also went down slightly due to cooler temperatures in December, Meralco added.
The reduction in WESM prices offset slightly higher prices from the Independent Power Producers (IPPs), whose prices went up by an average of 13 centavos. This was mainly due to a lowering of their dispatch level to 78.1% in the December supply month, from a high of 94.5% in November. Meanwhile, NPC charges remained stable.
Meralco sourced 42% its power requirements in December from the IPPs, 46% from NPC and 12% from the WESM.
Meralco reiterated that the cost of power sold by the generating companies can move from month to month based on many factors beyond its control like fuel prices, the foreign exchange rate, and WESM prices, among others.
Meralco added that should there be adjustments in the cost of generation from its various suppliers, it will reflect these changes in the customers’ bills, such as this month’s reduction.
The generation charge, which is the electricity bill’s biggest component, averages almost 60 percent of the customer’s average monthly power bill. This charge goes directly to Meralco’s power suppliers and not to Meralco.