By
Lenie Lectura- April 2, 2018
Electricity rates this
month are expected to go up, mainly due to a spike in spot-market prices,
according to the Manila Electric Co. (Meralco).
“There are very strong
indications that spot-market prices will register significant increases this
March, which would be reflected in the April generation charge,” Meralco
Utility Head for Economics Lawrence Fernandez said.
Meralco is expected to
announce April power rates next week.
Fernandez added that
the March supply month started with a “yellow alert” due to a constraint on the
supply of Malampaya natural gas, which, in turn, forced some gas-fired plants
to reduce output or go on forced outage.
A yellow alert means
there are not enough reserves to cover the largest-running generating unit at
the time, but does not necessarily lead to power outages.
One unit of the Malaya
power plant was reactivated from February 26 to March 1, again from March
5 to 10 and once again from March 12 to 14. These incidents signaled the need
to add to the reserves in the Luzon grid.
“As a result, we have
observed daily average prices in the spot market stay above P5.50 per
kilowatt-hour [kWh] in the first two weeks of the supply month, even spiking to
P8 per kWh several times,” Fernandez said.
The Wholesale
Electricity Spot Market (WESM) is the centralized venue for buyers and sellers
to trade electricity as a commodity where prices are based on actual use, or
demand, and availability, or supply.
“We hope the supply
situation improves in the rest of the supply month to help mitigate the
potential impact on the April generation charge,” he added.
Last month electricity
rates increased by P0.97 per kWh. However, only an P0.85 per kWh increase was
implemented in order to cushion the impact of the higher electricity rates on
consumers. The remaining P0.12 per kWh will be reflected in the
April bill, Meralco said.
The adjustment
brought the overall rate to P10.32 per kWh from February’s P9.47 per
kWh, equivalent to an increase of P170 in the bill of a residential customer
consuming 200 kWh.
Of the P0.7424 per kWh
increase in the generation charge, Meralco said it implemented an
increase of only P0.6414 per kWh in March. The difference would be implemented
in the April billing. From P4.6548 per kWh in February, the generation charge
for March was P5.2962 per kWh.
Contributing to the
generation-charge increase in March were higher charges from the WESM,
which increased by P1.4441 per kWh, because of tighter supply conditions in
Luzon.
The demand for power in
the grid grew by around 366 megawatts in February due to warmer temperatures,
while around 1,000 MW of generating capacity went on scheduled maintenance
outage. The share of WESM purchases to Meralco’s total
requirement this month was 19 percent.
Cost of power from
Independent Power Producers (IPP) also increased by P0.2814 per kWh due to the
annual scheduled maintenance outage of Quezon Power for the whole February
supply month and continued depreciation of the peso. The share of
IPP purchases to Meralco’s total requirement this month was 35
percent.
Meanwhile, charges from
plants under power-supply agreements (PSA) decreased by P0.3634 per kWh
due to improved average plant dispatch. PSAs provided 46 percent
of Meralco’s total energy requirement.
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