Secondary cap tempers power rate hike

by Myrna Velasco, February 2, 2015
from Manila Bulletin


The ‘nick of time’ enforcement of the new P9.00 kilowatt hour (kWh) permanent price threshold for the secondary cap in the Wholesale Electricity Spot Market (WESM) will likely temper the anticipated spike in electricity rates to be passed on to consumers this February billing month.

Energy Regulatory Commission (ERC) Executive Director Francis Saturnino Juan noted that while there had been a lull period when there was no secondary cap in the spot market, the implementation of the new one still coincided with the shutdowns of power plants which triggered up-ticks in spot prices.

He explained that there had been requirements for publication, so it took some time for the newly-enforced cost threshold of the secondary cap to be implemented. It was made effective January 9 this year.

The secondary price cap was maintained at P6.245 per kWh, but the price threshold was raised to P9.00 per kWh and the prescribed trading interval reference had been stretched to 168 hours or seven (7) days.

It was gathered from sources at the Manila Electric Company (Meralco) that the WESM price threshold had been breached several times, and the overall effect on February rates will still be uptrend.

Company executives indicated that they are still estimating the actual impact on the rates to be billed to consumers. Nevertheless, they tipped off that there were several instances when spot prices had tripled compared to trading in previous supply month.

Energy Secretary Carlos Jericho L. Petilla previously qualified that some of the plant shutdowns – for 1,300 megawatts capacity — have been scheduled because they advanced required maintenance works prior to summer months. Of the total capacity currently out from the system, he noted that 660MW have been logged as forced outages.

The energy chief similarly acknowledged that spikes in the load weighted average prices (LWAP) in the WESM had already been observed, yet he echoed that the secondary price cap could eventually temper the overall effect on the consumers’ electric bills.

As of last week, despite several power plants down, the system still held mainly due to relatively low demand.

Those on scheduled maintenance shutdowns are the 300-MW Unit 2 of Masinloc power facility; 300MW GNPower Unit 2; and the 460MW Quezon Power facility.

The facilities which suffered from unexpected breakdowns include the 300MW Malaya Unit 1 and 60MW Unit 6 of Limay plant due to high turbine vibration; 300MW Unit 2 of Malaya plant on main fuel heater leak; 27MW Tiwi 2 geothermal plant due to “low vacuum”; the 100MW Unit 8 of Limay plant and the 300MW Ilijan A-2 on “undetermined causes”.

The 300MW Unit 1 of Masinloc plant had also been on outage last month; as well as the San Lorenzo gas plant module 60 – but both generating facilities were already back on-line as of Monday (January 26).

The Masinloc unit was reported down due to “air heater trouble”; while the San Lorenzo plant unit had suffered outage for “planned rectification” at its burner number 8.

Meralco customers have been enjoying electricity cost reduction in successive months, but this February billing could just be the start of its pricey summer months.


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