Plant outages push Meralco rates higher this month

by Madelaine B. Miraflor – July 5, 2016

from Manila Bulletin

Manila Electric Co. (Meralco) consumers will have to bear an increase in their power rates this month, an unfortunate event that the power distributor is blaming to the series of plant outages seen in June which had cost tightness in supply.

Meralco announced on Tuesday that after reductions in the past two months totaling P0.54 per kilowatt-hour (kwh), the rate for its residential customers in July will go up by P0.29 per kwh.

A typical household consuming 200 kWh will specifically  experience an increase of around P58 in their electricity bill this month, while a bigger establishment with an average monthly consumption of 500 kWh would see its rates rising by about P146.57.

“After successive reductions in the past few months, there will be an increase this July. Spot market prices went up following tightness in the supply. June saw several plants going on outage, resulting to five days of yellow alerts,” Lawrence Fernandez, head of utility economics for Meralco, said in a text message.

Over the past months, customers have enjoyed a cumulative reduction of P108 in their electricity bill.

“In contrast, there were no yellow and red alerts in May,” Fernandez noted.

The increase in July rates was primarily due to the generation charge, which increased by P0.34 per kWh from last month’s level of P3.72 per kWh, which was the lowest since October 2004.

This increase in the generation charge was primarily due to the higher charges from the Wholesale Electricity Spot Market (WESM), which went up by P4.49 per kWh after dipping to P3.97 per kWh last month.

This was the result of higher generation capacity on outage during the June supply month compared to the previous month, resulting in five instances of yellow alerts in June (June 13, 14, 17, 21, and 22).

To recall, several power plants went on outage in June.

Those that went on scheduled outage were Pagbilao-2, San Lorenzo Mod 50 and 60, Sta. Rita Mod 40, and iPower. Meanwhile, those that went on forced outage include Sual-1, San Gabriel, Calaca 1 and 2, GN Power 1 and 2, Limay A and B, Sta. Rita Mod 10 and 30, SLPGC 1, SLTEC 1 and 2, San Roque 2, Pagbilao 1, and Ambuklao 2.

Due to the increased incidence of plant outages, Malaya 2 was also dispatched for around half of the June supply month, when peak demand in Luzon dropped to 9,260 MW.

The Malaya plants are “Must Run Units” and are typically instructed by the National Grid Corporation of the Philippines (NGCP) to be dispatched when reserve levels in the grid are very low.

Costs of energy sourced from the Independent Power Producers (IPPs) likewise registered a slight increase of P0.03, while cost of power from plants under the Power Supply Agreements (PSAs) decreased by P0.02 per kWh.

The share of PSAs and IPPs to Meralco’s total power requirements stood at 49.2 percent and 42.0 percent, respectively.  The share of WESM, on the other hand, went down from 12.8 percent the previous month to 7.8 percent in June.

Transmission charge registered a decrease of P0.08 per kWh, mainly due to lower ancillary charges. Taxes and other charges increased by P0.01 and P0.02 per kWh, respectively, following the increase in generation charge.