Power rates up this month

MANILA, Philippines - The Manila Electric Co. (Meralco) is set to charge higher rates this month due to an increase in generation cost last month.

Electricity rates are likely to increase further in August due to the shutdown of the Malampaya gas-to-power plant this month.

The 32 centavos per kilowatt-hour (kwh) hike in actual generation cost to P6.4592 per kwh will reflect in consumers’ bills this month, Meralco said in a statement.

Generation charge rose to P6.1392 per kwh in June from P5.5962 per kwh in May.

Meralco said prices in the Wholesale Electricity Spot Market (WESM) climbed to P20.73 per kwh in June from P16.30 per kwh in May.

WESM rates increased by P8.39 per kwh to P16.30 in May from P7.91 in April.

“Prices in the WESM went up due to a series of power plant outages (both forced and planned) that led to frequent incidents of yellow and even red alerts,” Meralco said.

Meralco said the Luzon grid was in yellow alert for 11 days in June compared with just three days in May.

A “yellow alert” is a system condition where the total reserves make up less than the capacity of the largest plant online, which for the Luzon grid is 647 megawatts.

“Though the rates of the National Power Corp. (Napocor) and the independent power producers (IPPs) declined, these were not enough to offset the increase in WESM prices,” Meralco said.

The cost of power sold by IPPs and state-owned Napocor declined by 14 centavos per kwh and 5.6 centavos per kwh, respectively.

“Although WESM only accounted for six percent (of Meralco’s total power requirement), its rates pushed the overall generation charge up,” Meralco said.

Meralco, meanwhile, warned its customers that the generation charge may further increase in the August billing.

“This is due to the scheduled eight-day maintenance shutdown of the Malampaya pipeline in mid-July, which in turn could force the natural gas plants to utilize more expensive liquid fuel,” Meralco said.

The generation charge, which is the biggest component in electricity charges, accounts for 56 percent of a consumer’s average monthly power bill. This charge goes directly to Meralco’s power suppliers.

Energy Undersecretary Josefina Patricia Asirit said consumers can expect lower rates in the next few months as the Energy Regulatory Commission is set to approve power supply agreements between Meralco and power generators.

“We will hopefully see more stable and cheaper rates,” Asirit said.

Meralco said the cost of power sold by generating companies could fluctuate monthly based on several external factors such as supply-demand situation, fuel prices, and the foreign currency exchange rate.

As part of its sourcing strategy, Meralco said it buys power from different sources.

Meanwhile, the Department of Energy (DOE) said steps are being undertaken to address the frequent and long blackouts in Palawan, including getting help from Napocor.

“To address present and future demand, there have been continuous discussions between Palawan Electric Cooperative Inc. (PALECO) officials and the DOE on the possible involvement of Napocor to provide for additional power by December to help mitigate the power supply deficit,” the DOE said.

Last week, the Puerto Princesa city council declared a state of emergency in the city, which is home to several well known tourist spots including the Underground River.

PALECO has put in place a voluntary load curtailment program involving big consumers as a stop-gap measure.

Puerto Princesa has been experiencing recurrent power interruption in the past two months due to the breakdown in the generating units of power providers PPGI and Delta P.

“The blackout they are experiencing is because of the technical concerns and challenges being experienced by their electricity suppliers,” Asirit said.

Peak demand in Palawan is 30.5 megawatts while supply from its current power providers total 35.5 MW.

The fast-growing demand for power in the premier tourist destination is a concern for the DOE, Asirit said.

PALECO has initiated bidding for its third new power provider as its contract with Napocor for 10-45 MW of electricity will expire in October 2013. The contract will involve 25 MW.

“PALECO has already resumed its bidding and a new power provider will be delivering power in the island by September 2013,” Asirit said.

“The DOE is doing all the necessary measures so Palawan can have ample supply, especially with the fast growth being experienced in Palawan as one of the country’s premiere tourist spots.”