Just as anticipated, the customers of Manila Electric Company (Meralco) will gain cost relief in their May billings as the generation charge component in its overall tariff been significantly slashed by P1.26 per kilowatt hour (kWh) to P5.5099 from last month’s P6.7699 per kWh.

From being the culprit in the electricity spikes in the last two months, the tables have been turned for the Wholesale Electricity Spot Market (WESM) as it is now the factor triggering Meralco’s cost downtrend – chiefly with the roughly P4.00 reduction in the amount it billed to the utility firm for April supply month.

Generation charge account for the cost of power delivered by Meralco suppliers, including those for state-run National Power Corporation, the WESM, and the utility firm’s contracted independent power producers (IPPs) like First Gen and Quezon Power Phils Ltd. Co. Meralco reiterated that such cost reduction in the bill was due to “lower electricity costs purchased by Meralco from its suppliers, notably the IPPs and WESM.”

It had been these two power suppliers to Meralco though that traded barbs as to which entity triggered the increases in Meralco bills in March and April. Generation charge is revenue-neutral to Meralco, which means that while it collects it from customers, this will be remitted or paid for to the suppliers without any financial benefit flowing into the utility firm’s coffers.

“The decrease could be attributed to the lowering of the price of electricity sourced from the WESM which registered a P3.90 per kWh decrease for the supply month of April compared to the March supply month,” Meralco first vice president and utility economics head Ivanna G. dela Peña has explained. From a high of P11.36 per kWh in March billing, the charges of the electricity spot market operator went down substantially to P7.46 per kWh last month.

It was noted that supply in the market had been on a healthier balance last month given the return of most plants in the dispatch domain, after being placed on preventive maintenance shutdown in the past two months.

On the other, the cost of Meralco’s contracted IPPs also softened by P1.24 per kWh; primarily noting cost reduction from the billed charges of First Gas after it swung back into natural gas fuel utilization.

The company’s two plants temporarily ran on condensate fuel when the Malampaya gas production facility was on maintenance shutdown from February to March.