Meralco hikes December generation charge

Contrary to earlier announcements that there would no longer be a power rate hike until the end of the year, the Manila Electric Co. (Meralco) has increased its generation rate charge by six centavos per kilowatt-hour (kWh) for the month of December.

Official documents show that the company’s generation charge goes up to P4.4125 for this month from November’s P4.3525 per kWh.

Meralco said it has to implement the upward adjustment in its generation fee due to lower dispatch of its independent power producers (IPPs) during the period.

The power utility firm said there was an outage in the National Transmission Corp. (TransCo) line, compromising the maximum dispatch for Quezon City Power Philippines Ltd., one of its IPPs.

It said another reason for the increase was that one more IPP was under preventive maintenance during the period.

Power rates are expected to shoot up by next month when a significant change in the gas sale purchase agreement (GSPA) between the National Power Corp. (Napocor) and the Malampaya group is implemented, industry sources said.

The joint project being referred to is the Korea Electric Power Co. (Kepco) – Ilijan Philippines Co. plant.

The sources said there is a provision in the GSPA between Napocor and the Malampaya consortium signed in 1997, that pegs the price of the purchased gas for Ilijan at $20 per barrel.

“This provision will be scrapped in January 2008 and most likely, they will use the prevailing high oil price hike as a new benchmark. This means higher price of power coming from the Ilijan natural gas-fired power facility and eventually result to higher electricity rates for consumers,” an industry source said.

This will be another challenge to the government as consumers may again bear the brunt of such move, the sources added.

But sources from Kepco said the two parties involved are already threshing out this issue so as to lessen the impact on electric consumers.

Industry players have come up with ideas to bring down electricity rates, such as the reduction or scrapping of royalties imposed on natural gas.