Plant breakdowns, WESM price may affect consumer power bill, Meralco exec says

by Lenie Lectura, January 27, 2015
from BusinessMirror

THE Manila Electric Co. (Meralco) has expressed concern over the frequent incidents of power-plant outages as this may have an adverse impact on consumers’ electricity bills.

“We are monitoring with concern the prices in the Wholesale Electricity Spot Market [WESM], which appears to be affected by multiple simultaneous outages of power plants,” Meralco Utility Economics Head Larry Fernandez said in a text message.

Latest data showed that a total of 2,532 megawatts (MW) of power have already been shaved off from the Luzon grid due to forced and scheduled shutdown of power plants.

Among the power plants that are on scheduled maintenance shutdown include Malaya Unit 1 (300 MW), GN Power Unit 2 (300 MW), Masinloc Unit 2 (315 MW) and Quezon Power (460 MW).

Meanwhile, the power plants that went on forced outage include the Limay 6 (60 MW), due to high turbine vibration; Limay 8 (100 MW), due to undetermined cause; Malaya 2 (350 MW), due to main fuel heater leak; GN Power 1 (300 MW), due to actuation of generator fault problem; Tiwi 2 (27 MW), due to low vacuum; Ilijan A, due to undetermined cause; and BacMan 2 (20 MW), due to still-undetermined cause.

“On top of around 1,000 MW of capacity under scheduled maintenance, another 1,400 MW is under forced outage or unscheduled outage,” Fernandez added.

Energy Secretary Carlos Jericho L. Petilla said there are still no reported power outage incidents in Luzon amid the high number of power plants going offline because demand is still manageable.

“The grid’s condition is still white, meaning normal. The cool weather keeps the demand low. We are hoping for the best,” he 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,” Fernandez added.

In the January billing rates, Meralco customers saw a drop in their bills following a decrease in generation charge, the largest component of the bill.

January power rates went down by P0.19 per kilowatt-hour (kWh).

A Meralco bill is made up of many charges. Generation charge, or the portion of the bill that goes to the generation companies or power producers, has further decreased by P0.22 centavos, from P4.94 last December to P4.72 this January. This is the lowest generation charge in 15 months.

The reduction in the generation charge was mainly driven by lower charges from the power facilities under the Power Supply Agreements (PSAs), which registered a reduction of P0.73 per kWh due to the normal operations of the power plants during the December supply month and the lower cost of fuel. Coal prices of some suppliers went down by almost $2 per metric ton.

The lower PSA charges more than offset increased charges from Independent Power Producers (IPPs) and WESM, which increased by P0.24 and P1.68 per kWh, respectively. The higher WESM charges were primarily due to the additional payment and compensation to power generators affected by the administered and secondary price cap implementation for the February to July 2014 supply months.

In terms of share to Meralco’s total power requirements for the December supply month from PSAs, IPPs and WESM accounted for 52 percent, 45 percent and 3 percent, respectively.

Meralco, however, said this series of lower generation charges over the past few months 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. Add to this the upward adjustment and longer threshold reference period before the secondary price cap in the WESM is triggered.

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