Power plant closures may hike rates

by Alena Mae S. Flores, January 27, 2015
from Manila Standard Today

Power distributor Manila Electric Co. on Tuesday expressed concern over the closure of several power plants in January which it said may affect electricity rates in February.

“We are monitoring with concern the prices at the Wholesale Electricity Spot Market, which appears to be affected by multiple simultaneous outages of power plants,” Meralco senior vice president Lawrence Fernandez said.

Fernandez cited reports showing that on top of 1,000 megawatts of capacity under scheduled maintenance, another 1,400 MW was under forced or scheduled outage this month.

“We are awaiting the billing of WESM to see how these outages affected spot market prices,” he said.

This, however, may be offset by the impact of low oil prices in the fourth quarter last year.

Energy Undersecretary Zenaida Monsada earlier said the price of the Malampaya natural gas used by three power plants in Luzon was indexed to oil prices which were on a downtrend.

“We will be experiencing the impact of Malampaya [fuel] price in February because they report quarterly,” Monsada said.

Fernandez confirmed Monsada’s statement that the price of Malampaya natural gas was adjusted per quarter. “Hence, the new natural gas price will be reflected in the generators’ bills to Meralco this January supply month, which would then be an input to the computation of the generation charge for the February bills to customers,” Fernandez said.

Fernandez said the natural gas price was based on a basket of indexes, which includes oil prices.  “The natgas price for January to March 2015 will partly be based on the average oil prices for the six-month period of July to December 2014.  The natgas price for October-December 2014 was partly based on average oil prices for the six-month period of April-September 2014,” he said.

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