Tuesday, December 27, 2016

Power rates may spike in March: Meralco

Posted on December 23, 2016

THE MAINTENANCE shutdown of the Malampaya natural gas platform in northwest Palawan early next year is likely to result in a P1-per-kilowatt-hour (kWh) increase in electricity rates, the Energy department said on Thursday quoting a simulation from the country’s biggest distribution utility.

“There will be an increase, but what we will do is to minimize the increase to soften the burden to our consuming public,” said Energy Secretary Alfonso G. Cusi in a statement.

The Malampaya offshore facility is scheduled to be shut down from Jan. 28 to Feb. 16 next year.

The electricity price simulation submitted by Manila Electric Co. (Meralco) to the Department of Energy (DoE) shows the power generation cost might increase by around P1 for each kWh, which customers will see in their monthly electricity bill by March 2017, the agency said.

Meralco’s simulation factored in the possible wholesale electricity spot market (WESM) prices because of plant outages during the period when Malampaya is not in service. It also counted in the generation cost of natural gas plants when they change to diesel and condensate liquid fuels, which are more expensive than Malampaya’s natural gas.

The Energy department said the 600-megawatt Ilijan natural gas power plant in Batangas would schedule its maintenance outage during the Malampaya downtime ahead of summer when power reserves fall as electricity demand rises.

Mr. Cusi said he was assuring the public that industry stakeholders would continue to coordinate their activities during the Malampaya shutdown “to avert any situation leading to the worst case scenario and to maximize the protection for the energy consuming public.”

The DoE also said it was making sure that the Malampaya shutdown is kept within schedule.

Mr. Cusi said his department had started “preparatory activities” with industry stakeholders to guard energy consumers against any adverse impact of the outage.

“My directive was clear -- the Malampaya maintenance activities should pose no substantial impact to supply of electricity by using all available resources and remedies, because power is a basic necessity for our countrymen,” he said.

He said “plans and alternative modes” should be in place and ready before the maintenance activities.

On Dec. 15, Mr. Cusi met with representatives of the energy industry and was apprised by Shell Philippines Exploration B.V. (SPEx) about the preparations ahead of Malampaya’s service maintenance shutdown. SPEx operates the $2-billion Malampaya natural gas development project.

The maintenance activities will cover the repair of the sub-sea facilities, an upgrade on the platform and maintenance on the onshore plant, the department said referring to SPEx’s advice.

“We have to ensure that the program works for Malampaya is within the prescribed schedule given to the DoE,” Mr. Cusi said, adding that historically, SPEx had met its previous maintenance schedule.

“It is expected that it will do the same this time,” he said.

The DoE said system operator National Grid Corporation of the Philippines (NGCP) had been tasked to simulate possible power supply scenarios.

Also on the power situation outlook, the Philippine Electricity Market Corp. (PEMC) will conduct a simulation on the prices at the wholesale electricity spot market during the Malampaya shutdown. PEMC is WESM’s governance body.

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