The lower prices in the Wholesale Electricity Spot Market (WESM) primarily pulled down the generation charge of utility giant Manila Electric Company (Meralco) by P0.684 per kilowatt hour (kWh) in its September bill to customers.

The company, in a press statement, indicated that prices from the spot market softened tremendously by P5.00 per kWh; a reversal of the up-ticks logged in August wherein overall charge due to cost of purchased power had been up by average P0.44 per kWh.

For the billed pass-through generation charge this month, it will be cut to P5.4119 per kWh from the previous billing cycle’s P6.0962 per kWh.

“WESM prices dropped by over P5 per kWh in August, which contributed to the September 2010 generation charge reduction,” Meralco has emphasized.

Apart from the lower spot market prices, the company noted that softening of cost procurement from its contracted independent power producers by P0.0182 per kWh contributed to the overall rate decline.

The utility firm has further explained that the lower cost from other supply sources “helped offset NPC’s (National Power Corporation’s) effective rate adjustment of P1.65 per kWh.”

Meralco emphasized that the higher charges by NPC were due to increases in fuel and purchased power cost adjustment (FPPCA); which went up by P1.0857 per kWh while its foreign exchange adjustment had also been higher by P0.1515 per kWh.

“These automatic rate adjustment mechanisms, which became effective starting March 2010, allow the adjustment of NPC’s rates based on the actual cost of its fuel and power purchases and movements in the foreign exchange rates,” the utility firm stressed. (MMV)