Meralco generation charge to increase by P0.44/kWh

Business Mirror
WEDNESDAY, 09 NOVEMBER 2011 21:52 PAUL ANTHONY A. ISLA / REPORTER


THE expensive power supply from the Wholesale Electricity Spot Market (WESM) last month has pushed Manila Electric Co. (Meralco) to collect a higher generation charge from its customers this month.


On Wednesday Meralco said its generation charge will increase by P0.44 per kilowatt-hour (kWh) to P5.79/kWh this month from P5.35/kWh last month.


Meralco attributed the increase to a surge in prices in the WESM and partly brought about by the full shutdown of the Malampaya natural-gas pipeline from October 20 to 26 for scheduled maintenance.


The country’s largest power retailer said the pipeline’s shutdown affected the operation of large power plants dependent on Malampaya for fuel, and that the Ilijan power plant, with a capacity of 1,200 MW, was completely unavailable as a result.


Meralco added that the grid resorted to tapping coal-based and oil-based generation to compensate for the lost capacity.


It said the reduction in available generation capacity in the grid led WESM prices to Meralco to rise to P11.57/kWh last month from P8.19/kWh in September.


Similar spikes in WESM prices in 2010 also affected the generation charge, which reached P6.76 and P6.10 per kWh in April 2010 and August 2010, respectively.


Meralco said the First Gas plants (Sta. Rita and San Lorenzo with 1,500 MW total capacity) continued to operate by shifting to liquid condensate fuel. Its impact was, however, offset as First Gas began to burn banked natural gas.


Banked gas refers to the Malampaya fuel that had been paid for by Meralco in prior years when gas was cheaper, but has not yet been utilized.


There was no change in the National Power Corp. (Napocor) rate to Meralco.


Meralco said it sourced 47.9 percent of its requirements from the independent power producers such as First Gas and Quezon Power, 41.5 percent from Napocor and the remaining 10.6 percent from the WESM.


For December, Meralco said that with the resumption of the pipeline’s normal operation, First Gas would be able to fully operate on the cheaper banked natural gas.


“Thus, barring any unforeseen major generation or transmission outage, WESM prices should normalize and customers may expect the generation charge to fall in the following month,” Meralco said. Meralco reiterated that the generation charge varies monthly, depending mostly on external factors such as world oil prices, the foreign exchange rate and fuel supply/constraint.


Meralco said the generation charge is the single largest bill component and comprises around 60 percent of the average electricity bill. Payment for it goes to the different generation sources like the IPPs, Napocor and the WESM.