The ongoing tensions between Russia and Ukraine severely dampened various industries and global economies, and the Philippines was not spared from the impact.
The country saw its inflation rate jump to 6.4 percent in July, the highest level in nearly four years, as rising fuel costs drove up the prices of basic commodities.
Fortunately, electricity rates in the National Capital Region became one less of a burden to consumers, following two consecutive months of rate reductions implemented by the Manila Electric Co. (Meralco).
Last July, Meralco announced that its rates went down by P0.7067 per kWh as a result of distribution-related refunds which offset the increase in generation charge.
For a typical household consuming 200 kWh a month, the overall reduction translated to as much as P141 in energy savings.
And the good news continued as Meralco announced the second consecutive downward adjustment in rates this August.
Rate of a typical household went down P0.2087 per kWh, equivalent to a total bill reduction of P42 worth of savings for a resident consuming 200 kWh.
As consumption increases, the total bill reduction similarly grows bigger.
With the said adjustments, Meralco’s rates now have a combined reduction of P0.9154 per kWh over the past two months and a net decrease of P0.2315 per kWh since the start of the year.
This came amid claims circulating online that rates in the provinces have been skyrocketing. Customers in Metro Manila and nearby provinces like Rizal, Cavite, Bulacan, and parts of Pampanga, Laguna, and Quezon where Meralco distributes power, were somehow spared.
Overall Meralco rate dragged down by lower generation, distribution charge
For August, the main driver of lower Meralco rates was the decrease in the generation charge, a component of the electricity bill that is fully paid to power suppliers. This alone makes up for about 60 percent of customers’ electricity bill, and therefore any movement concerning this charge significantly affects the monthly movements in Meralco’s rates.
For the latest billing period, Meralco said that generation charge went down by P0.1944 to P6.5812 per kWh from the P6.7756 per kWh registered last month due to the decrease in the charges from Power Supply Agreements (PSAs) which more than offset the increase in charges from Independent Power Producers (IPPs) and the Wholesale Electricity Spot Market (WESM).
PSAs, IPPs, and WESM accounted for 52 percent, 43 percent, and 5 percent, respectively, of Meralco’s energy requirement for the period.
Apart from generation charge, Meralco’s distribution charge also helped bring down overall rate. After remaining unchanged for more than seven years, Meralco’s distribution rate for a typical residential customer with 200 kWh consumption decreased by P0.0360 per kWh in August.
Distribution charge is the only bill component that goes to Meralco, while the other components like the transmission charge and taxes are paid to the system operator and remitted to the government, respectively.
As the largest power distribution utility in the Philippines, Meralco is relentlessly looking for ways to bring down electricity rates and shield customers from higher generation charges through its contracting strategies that include the conduct of Competitive Selection Process (CSP).
“We hope that the two consecutive months of rate reduction would be beneficial to our customers, especially during these challenging times when prices of other goods and services have been rising,” Meralco Vice President and Head of Corporate Communications Joe R. Zaldarriaga said.
“Meralco has always been proactive in seeking ways, including the conduct of CSPs, to ensure the availability of sufficient and cost-competitive power to our customers in the medium and long term,” he added.
Just recently, Meralco commenced the CSP for the 200-MW baseload supply offer of Solar Philippines, which will come from a solar and battery storage project that the company is developing.
Also ongoing are Meralco’s CSP for Ahunan Power’s proposal to supply 500-megawatt of mid-merit requirement from renewable energy (RE) starting 2026, and negotiations for another mid-merit offer of Terra Solar covering 850 MW RE supply.
These CSPs are in compliance with the Department of Energy’s Renewable Portfolio Standards policy and part of Meralco’s efforts to source up to 1,500 MW of its power requirements from RE sources.
Investing in service improvement
As the Philippines continues to slowly recover from the challenges brought about by the pandemic, Meralco continues to ensure delivery of stable, reliable, and cost-competitive electricity service to its customers.
During the first half of the year, Meralco’s system average interruption duration index (SAIDI), or the average duration index of interruptions per consumers, improved by 4 percent in the first half of the year to only 62.508 minutes from the 64.906 minutes recorded in the same period last year.
The average time to connect was also better by 5 percent to only 1.62 days from the average of 1.71 days registered the same comparable period.
Average time to process applications improved by 30 percent to an average of 2.40 days from the 3.41 days while call center performance picked up by 82 percent to an average of 3.51 seconds from the 19.51 seconds average recorded year-on-year.
Meralco also ramps up its investments to ensure excellent service delivery, while supporting the government’s infrastructure and road-widening projects.
The company already spent P14.2 billion in capital expenditures as of end-June, of which 62 percent or P8.74 billion was utilized for new connections, asset renewals, and load growth projects, among others.
Major networks projects completed during the first half of the year include the development of Commonwealth Gas-Insulated Switchgear (GIS) substation in Quezon City and Escoda GIS substation in Manila; the uprating of banks at Calumpit substation in Bulacan; and the rehabilitation of the control system of the 115-kV GIS at Legaspi substation in Makati City.
During the first half of the year, the company also successfully relocated 537 poles to ensure the completion of the government’s infrastructure projects, including the NLEX-SLEX Connector Road and the PNR North 1 Rail Transit projects, while another 775 poles have been retired to pave way for road widening projects of the Department of Public Works and Highways (DPWH) and local government units (LGUs).
Making customers the highest priority
With various customer-centric initiatives, Meralco has proven that it does not stop in implementing programs geared towards further improving its service.
Along with its promise to keep the lights on, Meralco is also a champion of service with compassion. Even when the restrictions have eased and operations of affected industries have normalized, Meralco remained sensitive to the challenges faced by its customers.
To make the company more reachable amid the limitations caused by the pandemic last year, Meralco expanded its digital channels such as Meralco Online and the Meralco Mobile App to make settling bills easier and more convenient for its customers.
Through the Meralco Appliance Calculator, the company helps empowers customers to manage their consumption by giving them an idea on how much electricity their gadgets and appliances consume.
As Meralco ramped up the capacity of customer care representatives handling concerns, more customer-centric initiatives were introduced to allow customers to discuss their concerns safely and remotely. Additional customer touchpoints utilized include Facebook Live Chat, which serves 8,000 transactions per hour; Virtual Customer Assistant, which allows customers to speak with Meralco representatives through video conferencing; and Online Customer Appointment, which enables customers to schedule appointments before visiting Meralco Business Centers.
“Besides ensuring that we will meet the growing requirements of our customers, we continue to develop and implement programs that will further improve the stability and reliability of the service we deliver to our customers. These include our efforts to strengthen our distribution facilities and energizing key facilities to support infrastructure development that we believe play a crucial role in the government’s nation-building efforts,” Zaldarriaga said.