Meralco Sees Reduction In January Generation Charge, WESM Prices Lower

Manila Bulletin
By MYRNA M. VELASCO
January 6, 2012, 11:29pm


MANILA, Philippines — A downtrend in prices at the Wholesale Electricity Spot Market (WESM) is seen resulting in rate reduction to be billed to the customers of Manila Electric Company (Meralco) this January.


Meralco communications manager Joe Zaldarriaga indicated that based on the preliminary numbers billed by suppliers to the utility firm, “we see a downward adjustment in the generation charge.”


He stressed that such assumptions have been hinged on indications “of lower power prices in the spot market, hence, there would be a slight reduction.”


Meralco executives added that the rate cut “will mainly be due to lower WESM prices, which we observed from the daily results reported by the PEMC (Philippine Electricity Market Corporation).”


It was further emphasized that “the supply situation has normalized, coupled with slightly lower power demand because of cooler December temperature.”


The cheaper plants are also being made available and dispatched, as the system may not necessarily need to resort much to running the peaking facilities with demand already being met sufficiently.


The company also indicated that no significant movements are expected from its supply procurements from contracted independent power producers (IPPs), “as foreign exchange rate and fuel costs were relatively stable.”


Meralco noted that the final numbers on the January generation charge will likely be out next week, as the bills from other suppliers are still being awaited.


It can be gleaned from a report of the electricity spot market operator that while there have been congestions in the system as well as plant trippings that were reported last month, the average price logged for December still ended up lower.


For instance, toward the end of December, there have been congestion occurrences at the 138-kilovolt New Naga-Cebu line and at the 138-kV Samboan-Amlan line. However, these were not subjected to price substitution methodology which is generally the case when there are declarations for pricing errors in spot market trading.


There were also instances when Meralco had to resort to automatic load dropping because of the Calaca plant’s tripping, but since the service was restored immediately, it has not really affected pricing that much.


This is the second month when Meralco’s generation charge would be on a decline. Its billing for December was similarly on a downtrend because of improved supply condition following the return of the Malampaya gas pipeline to normal operations.