Meralco officials can’t guarantee blackout-free summer, but power-rate hike likely in February

by Lenie Lectura, January 28, 2015
from BusinessMirror

Officials of the Manila Electric Company (Meralco) on Wednesday could not guarantee that there will be no power outages during the summer months but hinted that generation charge, the largest component of an electricity bill, could go up in February.

“We are trying the best we can in terms of procuring supply. We can be ready as best as we can but it really depends on how the power plants will operate. There is no certainty, really,” Meralco Chairman Manuel Pangilinan said.

Pangilinan was referring to a number of power plants that went offline either due to forced outage or scheduled maintenance work.

Latest data indicate that some 660 megawatts (MW) of installed capacity from various power plants in Luzon have already been shaved off due to forced outage and over 1,300 MW owing to scheduled maintenance of power plants.

“The reason there are a number of power plants that are out, particularly those that are on maintenance shutdown, is because it is better to do this than in summer when demand is at its peak,” Energy Secretary Carlos Jerico L. Petilla explained.

Even Meralco President Oscar Reyes said it is difficult to guarantee a brownout-free summer. “Supply is there. If there are no further forced outage, then malaki ang tiwala namin na walang power outage,” he said.

Despite low demand for electricity because of cool weather, Meralco hinted that there could be adjustments in power rates in the February power bills. This is because prices in the Wholesale Electricity Spot Market (WESM) are affected by the multiple simultaneous outages of power plants.

“The price at the spot market, we can’t estimate that. Remember that WESM prices is a supply and demand thing. Although we are sourcing only a small portion of our requirements at the WESM, it still affects the overall power rates. Yes, there may be higher generation charge in February,” Reyes said.

In the meantime, Meralco is closely monitoring prices at the spot market. “We are awaiting the billing of WESM to see how all these outages affected spot-market prices,” Meralco Utility Economics Head Larry Fernandez said.

In terms of share to Meralco’s total power requirements for December 2014 supply month, which are reflected in the January 2015 electricity bills, the power supply agreements, independent power producers and WESM accounted for 52, 45 and 3 percent, respectively.

Generation charge have been low in the past months, but Meralco said that this series of lower generation charges may be difficult to sustain, especially as warmer temperatures set in, coinciding with the shutdown of the Malampaya gas facility sometime from March to April this year.

Probe

Meanwhile, lawmakers have called on the House Committee on Energy to conduct an inquiry on Shell’s maintenance schedule of the Camago Malampaya natural-gas facility in the West Philippine Sea and its impact on the overall power-supply situation of the country.

Party-list Reps. Walden F. Bello and Ibarra M. Gutierrez III of Akbayan sought the inquiry through House Resolution 1785, saying that the public must know if Shell’s action in the Camago Malampaya gas reservoir is undermining the country’s energy-security requirements.

“There is a need to determine if the planned maintenance activities by Shell of the Malampaya facility are the single biggest contributory factor in the projection that there will be a power crisis in the summer months of 2015,” Bello said.

Bello said the Malampaya deep-water gas-to-power project is a joint undertaking between the Philippine government and the private sector to develop the Camago Malampaya gas reservoir in the West Philippine Sea, northwest of Palawan.

He added that the Department of Energy (DOE) leads the project and Shell Philippines Exploration B.V. develops and operates the gas reservoir.

According to Bello, also chairman of the House Committee on Overseas Workers Affairs, the Executive announced a few months back that it is expecting a shortfall in the supply of power during the summer months of 2015.

Bello said this maintenance schedule has been cited as one of the reasons for the projected power crisis this year. Malampaya supplies almost half of the power demand of the island of Luzon.

“This planned maintenance at the time of the year when demand for power is at its peak greatly influences the country’s ability maintaining steady power-supply for all of its consumers,” Bello said.

Gutierrez said Shell remains inflexible and insensitive despite the projected power-supply shortfall this year.

“To prevent this problem created by Shell from happening again, Congress should come up with a framework legislation that would ensure that future energy developers contracted by the government will strictly adhere to the energy-security requirements of the country,” Gutierrez said.

(With PNA)

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