Meralco warns of higher power rates in February

MANILA, Philippines - Manila Electric Co. (Meralco), the country’s biggest power distributor, said it continues to prepare for the expected tightness in supply by drawing in more participants from the Interruptible Load Program (ILP).

This developed as Meralco warned that unplanned outages, some of which started last year, could translate to higher electricity rates in February.

“If there will be no (unplanned outage), we are more confident that there would be no outage,” Meralco president Oscar Reyes told reporters yesterday.

Meralco chairperson Manuel V. Pangilinan assured that the company has been stepping up preparations for the summer when there is a projected power supply deficit of 700 megawatts (MW) due to the one-month maintenance shutdown of the Malampaya natural gas field in offshore Palawan, which supplies roughly 40 percent of Luzon’s power requirements.

“We have over 600 MW (in ILP) now,” Pangilinan said.

Reyes said the target is to secure more commitments and hopefully bring the committed capacity up to 1000 MW.

Under the ILP scheme, big power users will be asked to run their own generators when supply is short in the summer months, instead of getting their power from the Luzon grid. In exchange, they will be compensated for their fuel costs.

The electricity that would not be taken from the grid would be available to households and other users, sparing them from rotating blackouts.

But consumers may have to shoulder the additional cost of the ILP if Congress is unable to pass a resolution granting President Aquino special powers to tap additional capacity through the ILP.

The special powers would supposedly mandate the government to shoulder the cost of the ILP so it is not passed on to consumers.

Energy Secretary Carlos Jericho Petilla, for his part, said Meralco would comply with what is allowed.

“Meralco will follow the law. It really all depends on what the joint resolution will have,” Petilla said.

A total of 2,532 MW in power capacity are lacking in the Luzon grid because of both unplanned and scheduled shutdowns of several power plants.

According to industry data, eight power plants are out, with some units on unplanned outage and some on scheduled maintenance shutdowns.

Those that are on unplanned outage are Limay 6 in Bataan, with 60 MW unavailable since March 27, 2014 due to high turbine vibration; Limay 8 in Bataan with 100 MW unavailable since April 24, 2014 due to undermined cause, Malaya 2 in Rizal with 350 MW unavailable since Sept. 11, 2014 due to main fuel heater leak; GN Power 1 in Quezon with 300 MW unavailable since Oct. 26, 2014 due to actuation of generator fault protection; Tiwi 2 in Albay with 27 MW unavailable since Dec. 17, 2014 due to low vacuum; Ilijan A with 300 MW unavailable since Dec. 23, 2014 due to a damaged compressor turbine and the BacMan in Bicol with 20 MW unavailable since Jan. 18 due to still undetermined cause.

Meanwhile, for February electricity bills, Meralco said this may be higher as a result of higher rates at the Wholesale Electricity Spot Market (WESM), the country’s trading floor for electricity, which in turn stemmed from tight supply due to the power plant outages.

“Reports show that on top of around 1,000 MW of capacity under scheduled maintenance, another 1,400 MW is under forced or unscheduled outage. We are awaiting the billing of WESM to see how all these outages affected spot market prices,” Lawrence Fernandez, head of Meralco’s Utility Economics, said in a text message.