August 10, 2015

MER’s pass-through charges lower by P0.26/kWh in August

BusinessWorld today reported that Manila Electric Co’s (MER) pass-through charges will decrease by P0.26/kWh in August. This month’s reduction marks time the sixth time this year that rates have gone down. Generation charge will go down by P0.187/kWh to P4.553/kWh from P4.74/kWh in July.

The drop in generation charge was mainly a result of lower cost of power purchased from independent power producers First Gas Power Corp (FGPC) and FGP Corp (FGP), which declined by P0.2668/kWh to P4.073/kWh and P0.5484/kWh to P3.984/kWh, respectively. Collectively, FGPC and FGP – subsidiaries of First Gen Corp (FGEN) – comprised 36.1% of MER’s total energy volume.

Prices from the Wholesale Electricity Spot Market (WESM), which accounted for 11.1% of MER’s total energy volume, were also lower by P4.1974/kWh to P7.9147/kWh. The lower rates from these suppliers more than offset the higher cost of power purchased from power supply agreements (up P0.1174/kWh to P3.9361/kWh) and Quezon Power (up P0.3558 to P4.2792/kWh). Meanwhile, other pass-through charges (such as transmission, taxes and other charges) collectively decreased by P0.07/kWh.

Our take: Note that all of these charges are pass-through components and should not affect MER’s over-all bottom line with the savings accruing directly to consumers via lower electricity rates. According to MER, the total reduction over the past four months amounted to P1.56/kWh. Compared with the same period last year, this month’s generation charge of P4.553/kWh is lower by 19% or P1.0825/kWh than August 2014’s average rate of P5.6352/kWh.– WealthSec