July power rates could see hike on plant shutdowns

by Lenie LecturaJune 24, 2016

from Business Mirror

Power rates in July are likely to be adversely affected by the number of times a yellow alert was issued this month.

According to Manila Electric Co. (Meralco) officials, the Luzon grid experienced five yellow alerts due to a number of power plants that went on unscheduled shutdown. A yellow alert is issued when power reserves dwindle and fall below 647 megawatts (MW). A yellow alert does not necessarily mean power outages or blackouts, but it could turn to a red alert, which means power outages are very likely to occur.

“Given the number of yellow alerts recently, it is likely that this will have an impact on prices in the spot market,” said Meralco Spokesman Joe Zadriaga in an interview. By spot market, he was referring to the Wholesale Electricity Spot Market (WESM), the country’s trading floor for electricity.

“In the past, whenever there is tightness in supply, the usual impact is higher prices. Coming from two straight months of reductions at record-low levels, the trend of lower rates may be difficult to sustain due to the yellow alerts,” Zaldariaga added.

Power rates this month went down by P0.13 per kilowatt-hour (kWh) to P8.32 per kWh due to the downward movement in the generation charge, which is P0.16 per kWh lower than in May.

In May power rates stood at P8.444 per kWh, lower by P0.41 per kWh. The reduction was due to the downward movement in generation, transmission, taxes and other charges

Meralco Head for Utility Economics Lawrence Fernandez, in an interview, explained that yellow and red alerts indicate a tight supply situation, and that there is less or no reserve margin in the grid.

“This will be typically be reflected as higher spot market prices. It could have an upward pressure on generation,” he said.

No actual figures were available. “We have to see how the supply-demand situation unfolds,” Fernandez added.  Meralco normally provides the calculated power rates every first week of the month.

The Luzon grid was placed on yellow alert on June 13, 14, 17, 21 and 22.

On June 13 some 1,887 MW of power has been shaved off from the Luzon grid, after four power plants went on forced shutdown. These plants are the Sual 1, QPPL, Calaca 1 and GN Power.

The following day, two plants were still on shutdown.

On June 17 the third yellow alert for the month was issued when power plants GN Power 2, Angat 2, Pagbilao 2, Malaya 1 and SLPGC1 unexpectedly shut down.

On June 21 Luzon was placed on yellow alert due to thin-power reserve brought about by insufficient power supply. On that day, GN Power 1, SLPGC 1 and Angat Main 2 were still not running, while the Pagbilao 2 and Kalayaan 3 were shutdown due to scheduled maintenance.

Meanwhile, the Calaca 1 and Malaya 2 have limited outputs.

On Wednesday the fifth yellow alert for the month was issued by the National Grid Corp. of the Philippines.