Meralco warns about higher rates in spot market

By Alena Mae S. Flores – May 05, 2019

Power retailer Manila Electric Co. said this week’s electricity bill will reflect the higher charges in the Wholesale Electricity Spot Market, the trading floor of electricity.

“We expect higher charges from the WESM, but could not make a good estimate, as significant share around 15 percent of trading intervals were affected by the secondary price cap or were subject to market intervention,” Meralco head of utility economics Lawrence Fernandez said.

WESM is the country’s trading floor of electricity where Meralco secures about 10 percent to 20 percent of its monthly requirement.

Under Energy Regulatory Commission Resolution No. 20, Series of 2014, a breach of the P9-per-kilowatt-hour cumulative price threshold over a seven-day period would trigger an imposition of a P6.245-per-kWh cap.

“While we expect higher charges from the WESM because of the recent supply shortages, we hope that this can be offset by reductions in rates from our IPPs (independent power producers) and PSAs (power supply agreements),” Fernandez said.

He said initial figures from IPPs and PSAs showed rate reductions, mainly due to lower fuel prices and an appreciation of the peso.  Fernandez said, “we are uncertain if this reduction will be offset by the expected increase in WESM charges.

”Meralco is set to release the final May power rates on Wednesday.

Meanwhile, the Energy Regulatory Commission started the investigation on the power outages from March and April but is still waiting for data from power industry players.

ERC commissioner Catherine Maceda said the allegations of “gaming” and/or collusion among industry players remained allegations until proven otherwise.  She assured that the regulator would thoroughly conduct an investigation and impose sanctions if needed.

“We impose the necessary sanctions, if necessary, and after due process. As simple as not submitting a report can be sanctioned,” Maceda.

“We are not alleging that there is gaming or collusion, there are people who are alleging that. Those are just allegations.  Until we have the hard data, then nobody can say there is gaming in the market,” the commissioner said.

Maceda said the ERC visited nine power plants that went on offline on March 5 to April 15 to verify their claims.

Meanwhile, Philippine Independent Power Producers Inc. said its members would not tolerate collusion and were cooperating fully with the government in the wake of the continuing yellow and red alerts in the Luzon grid.

“We thoroughly support a competitive market, and we are open to investigation by our regulators on allegations of collusion,” PIPPA president Anne Estorco Macias said in a statement.

PIPPA is composed of 28 companies engaged in power generation.

“While it is quite unfortunate that there have been forced outages affecting all of us, these are again, isolated and unforeseen incidents that were aggravated by several factors at that particular time. We generators are committed to solving these problems at the soonest possible time because the more we stay offline and experience technical difficulties, the greater impact it has on the financial viability of the plant,” Masias said.

Masias said old and new plants experience forced outages and there was a need  for more ancillary services to avoid a blackout.

“Let us focus on regulations that can provide solutions and try to avoid punitive policies, which only serve to discourage investors and developers alike,” Masias said.