DOE: Power rates declining as demand, fuel prices fall

Electricity rates are on a downward trend as demand has fallen and the prices of the type of fuel sourced by power distributors have declined, according to the Department of Energy (DOE).

Based on data collected by the agency, the average power rates in the entire country stood at P13.61 per kilowatt hour (kWh) in March. This fell to P12.51 per kWh in April and further to P12.05 per kWh in May. It then slightly went up to P12.26 per kWh in June but declined to P11.69 per kWh in July and dropped to P11.15 per kWh in August.

'Summer is over so demand decreased,' said DOE Undersecretary Rowena Cristina Guevara during Meralco Power Academy's 'Giga Summit on Sustainable Energy, Energy Efficiency, and the Future Grid 2023' last week.

'It is also important to note the decreasing trend on electricity rates from the beginning of the year up to the previous month (August) was due to the lower price of fossil fuels such as coal and natural gas,' she added.

The lowest average power rate during the six-month period was recorded in August. Luzon's average power rate last month stood at P10.92 per kWh, Visayas at P11.44 per kwh, and Mindanao at P11.20 per kWh.

'We recently established databases for electricity rates in each distribution utility across the country. The Energy Regulatory Commission [ERC] has published the database of electricity rates and consumers are empowered with information on how their respective distribution utility is performing,' she said.

Based on the same data, the average power rates of the distribution utilities (DUs) versus electric cooperatives (ECs) during the period were lower. From March to August this year, DUs charged P11.98 per kWh, P11.35 per kWh, P10.92 per kWh, P11.46 per kWh, P10.84 per kWh, and P10.24 per kWh.

The ECs, meanwhile, collected P13.85 per kWh in March, P12.67 per kWh in April, P12.19 per kWh in May, P12.36 per kWh in June, P11.81 per kWh in July, and P11.28 per kWh in August.

'Notice that in general, private distribution utilities have lower rates than electric cooperatives,' added the DOE official.

This may be brought about by the type of fuel that the DUs and ECs source from their power supplier. 'We all know that the DUs enter into a power supply agreement. Our electricity rates largely depend on the price of generation. So, if the fuel that was sourced was expensive at that time then our electricity rates also go up.'

Coal makes up 44 percent and 59.6 percent of the installed capacity and gross power generation of the country, respectively. This is followed by renewable energy (RE) with 29.2 percent of the installed capacity and 22.1 percent of the total gross power generation as of 2022.

For RE breakdown, geothermal and hydro sources continue to dominate the country's RE

mix in 2022 with a 9.3-percent and 9-percent share, respectively, in the total gross power generation, while solar is significantly low in gross generation due to its variability and limitation to daytime use.

In terms of energy demand, the country's total final energy consumption (TFEC) in 2022 reached 35.9 millions of tons of oil equivalent (MTOE), a slight increase from its 2021 level of 35.1 MTOE.

Among the major economic sectors, transport is the most energy-intensive sector with a 34.4-percent share, followed closely by the residential sector with 28.8 percent.

The aggregate oil demand, including non-energy and fuel input to power generation, increased to 18.3 MTOE in 2022 from 17.7 MTOE in 2021. This was attributed to the accumulation in oil consumption in the transport sector and power plants.