Electricity prices seen easing in January

Manila Times.net
Published : Saturday, January 07, 2012 00:00 Written by : Euan Paulo C. Añonuevo, Reporter


CONSUMERS can expect a decrease in power rates this month as stable power generation and the cool weather starts to put a damper on prices, a Manila Electric Co. (Meralco) official said.
Lawrence Fernandez, Meralco utility economics head, told reporters on Friday that the country’s largest power distributor expects a drop in prices at the Wholesale Electricity Spot Market (WESM) in January.


“It appears that the generation supply situation has normalized, coupled with slightly lower power demand because of cooler December temperature,” he said.


The WESM is a trading platform for power suppliers and large customers like Meralco, which sources the power requirements on behalf of its nearly 6.4 million customers.


WESM pricing is settled by the hour based on market conditions, making electricity prices at the spot market volatile.


Last December, Meralco’s generation charge went down by P0.27 to P5.51 per kilowatt-hour (kWh) from P5.79 per kWh in November also because of lower WESM prices which fell by P3.49 per kWh to P9.00 per kWh from a high of P12.48 per kWh in the October supply month.


WESM prices increased in October because of a power supply constraint brought about by the maintenance shutdown of the Malampaya natural gas pipeline from October 20 to 26. The Malampaya, which fuels three natural gas-fed plants in Luzon, resumed operations in November.


Also, the drop in temperature leading to the latter months of 2011 curbed demand for electricity used for cooling appliances. This in turn helped further deflate spot market prices.


Besides the effect of supply and weather on WESM prices, Fernandez said that foreign exchange costs of Meralco’s contracted power plants were relatively stable in the past weeks.
This should also bode well for consumers as 60 percent of what they pay Meralco for their electricity goes to these power suppliers.


The Meralco official, however, said that they have yet to come out with the generation charge for January “though we are expecting a slight reduction.”


“This will be mainly be due to lower WESM prices, which we observed from the daily results reported by the Philippine Electricity Market Corp.,” Fernandez added.