THE Manila Electric Company (Meralco) announced a reduction in electricity bills this July.

In an advisory, the overall rate for a typical household went down from P0.7067 per kWh to P9.7545 per kWh from P10.4612 per kWh last month.

This is equivalent to a decrease of around P141 in the total bill of a residential customer consuming 200 kWh.

This month’s reduction effectively reversed all increases in the overall power rates since the start of the year.

The overall rate reduction was due to the Energy Regulatory Commission’s (ERC) Decision to recalculate the difference between the Actual Weighted Average Tariff (AWAT) and the final Interim Average Rate (IAR) of P1.3522 per kWh during the lapsed period of July 2015 to June 2022, following a downward adjustment in Meralco’s “Regulatory Asset Base” for the 3rd Regulatory Period.

The decision dated June 16, 2022, directed Meralco to implement an additional “Distribution True-Up” refund totaling P21.8 billion for a period of 12 months or until the amount is fully refunded.

This is equivalent to a refund of P0.8656 per kWh for residential customers and will appear as a separate line item called “Dist True-up 4” in the power bills starting this July.

“As a highly regulated entity, Meralco’s rates undergo a review and confirmation process to make sure they are fair and reasonable. The immediate implementation of the ERC Decision was able to more than offset the impact of higher generation charge this month to the benefit of our customers,” Atty. Jose Ronald V. Valles, Meralco Head of Regulatory Management, said.

The generation charge for July went up by P0.2166 to P6.7756 from the P6.5590 per kWh registered the previous month.

Charges from the Wholesale Electricity Spot Market (WESM) increased by P3.9649 per kWh amid tight supply conditions in Luzon and charges from Power Supply Agreements (PSAs) went up by P0.3186 per kWh.

The Philippine peso depreciated by 5% this month, the steepest decline in the peso’s value since June 2003, affecting around 32% of PSA costs that are dollar-denominated.

The continued increase in international coal prices also contributed to the increase in the PSA rate. Meanwhile, charges from Independent Power Producers (IPPs) decreased by P0.4669 per kWh.

This month’s generation charge also includes the last installment of deferred generation costs for the April bill, equivalent to an add-on of around P0.13 per kWh in the generation charge.

The transmission charge for residential customers inched down by P0.0012 per kWh, while taxes and other charges also registered a net decrease of P0.0565 per kWh.

The collection of P0.0025 per kWh representing the Universal Charge-Environmental Charge remains suspended as ordered by the ERC.

Meralco reiterated that it only “earns from distribution, supply, and metering charges”, which have remained unchanged since the reduction in July 2015.

Meanwhile, pass-through charges from generation and transmission are paid to the power suppliers and the system operator, respectively, while taxes, universal charges, and Feed-in Tariff Allowance (FIT-All) are all remitted to the government.