MANILA, Philippines - The electricity rate for December 2013 should be significantly lower than P4.15 per kilowatt-hour, according to the Energy Secretary Carlos Jericho Petilla.
He said an artificial shortage in power supply caused prices at the electricity market to rise during the one-month maintenance shutdown of the Malampaya natural gas platform.
Capacities not offered in the market ranged from 1,546 megawatts to 2,703 MW, pushing up clearing prices at the Wholesale Electricity Spot Market (WESM), the country’s trading floor for electricity.
Prices at the spot market are determined by supply and demand and are easily affected if there is a shortage in capacities.
This is among the findings of the Department of Energy (DOE), which conducted its own investigation on why prices went up in the WESM during the one-month shutdown.
The generation charge of power distributor Meralco rose in December 2013 by P3.44 per kilowatt-hour to P9.10 per kwh from only P5.67 per kwh in November.
This translated to an actual electricity rate of P4.15 per kwh in December, which is currently the subject of a temporary restraining order (TRO) issued by the Supreme Court.
Petilla, however, could not say what the rate should be, saying that it was up to the power regulator Energy Regulatory Commission (ERC) to determine.
The ERC is expected to soon issue its report on the matter.
To prevent similar situations in the future, Petilla recommended requiring power plants to declare their available generating capacities to ensure there is no withholding of capacity.
The energy department’s own investigation into the disputed power rate hike last year showed that supply tightened after some power plants withheld some of their capacities, resulting in a shortage of some 2,300 megawatts.
In a report submitted to Supreme Court last week, the energy department said there is an urgent need to have a regular updating of the status of all generating units to ensure that there is no withholding of capacity.
“To improve the short-term and long-term planning as well as to determine real-time available generating capacity, there is an urgent need to pursue the reconciliation and standardization of the different definitions of ‘capacity’ being used by DOE, ERC, NGCP (National Grid Corp. of the Philippines), PSALM (Power Sector Assets and Liabilities Management Corp.), the National Power Corp. and PEMC (Philippine Electricity Market Corp.),†the DOE also said.
The DOE noted for example that the registered capacities in PEMC are based on figures reflected in the certificate of compliance issued by the ERC, and is good for five years.
Over time, these capacities, which were then almost equivalent to the installed capacities of DOE and NGCP, may no longer be accurate and there is a need to test them for de-rating to be able to reflect the true capacity, the DOE said in its report.
Based on the DOE’s findings, Petilla said there are a number of power plants that are in the list of generating units but are no longer operating.
“The DOE will immediately recommend to ERC the review of the list of active generating units and de-list or impose sanction to those that have not been actively operating and participating in the WESM for trading for so many years now,†the DOE said in its report.
The PEMC will be directed to provide classifications of capacities registered in the WESM to consider the practicality of a generating unit to participate in all trading intervals such as those that are under testing and commissioning for internal use, the DOE added.
In its report, the DOE also recommended a review of the power supply agreements of Meralco to ensure that these contracts should have provisions of “least cost†replacement power during times of outages of power suppliers.
“The ERC in its approval of the PSAs between a generation company and a distribution utility should consider not only the price but suggested to do holistic approach such as the resulting contracted energy mix, to enable the DU to have adequate capacity to cover its load profile requirements, at least cost,†the DOE said.