The “worst case impact” of the Supreme Court’s temporary restraining order (TRO) is compelling Manila Electric Company (Meralco) to resort to manual load dropping (MLD) or supply curtailment, thereby, leading to brownout incidents within its franchise area in the beginning months of the year.
The utility firm stated such scenario in its December 26, 2013 letter to Energy Secretary Carlos Jericho L. Petilla; and the portended brownout incidents may happen even prior to the summer months.
“Depending on the power supply and demand situation in the coming months, this may entail employing manual load dropping in some areas in order to limit Meralco’s exposure to the volatility of WESM (Wholesale Electricity Spot Market) prices and allow the full pass-through of its generation cost and other related charges at the rate temporarily capped by the Supreme Court TRO,” the Meralco letter stated.
Meralco said its MLD recourse had to be anchored on any decision to trim down its WESM purchases, partly also because of the deferment of payment it has been seeking from power suppliers.
“We would like to impress on the DOE that the temporary cap on the generation charge of P5.6673 per kilowatt hour, especially if made to apply on a continuing basis for the January 2014 and subsequent supply months, would severely constrain Meralco’s sourcing of power from PEMC (Philippine Electricity Market Corporation) and the generating companies,” Meralco has noted in the letter.
January will remain a problematic billing month for Meralco because its generation charge was just capped by the ERC at P7.37 per kwh. So from the restrained pass-on level of P5.6673 per kwh in December, there will be an increase of P1.7027 per kwh in this month’s generation charge and such may trigger another round of controversy.
The generation charge being passed on by Meralco under its December billing had to revert to the P5.67 per kwh level following the high court’s verdict.
In the three-tranche pass on of its P4.15 per kwh hike as earlier proposed to the Energy Regulatory Commission (ERC), Meralco originally intended to reflect the initial P2.41 fraction of the total increase for December, and at a generation charge of P7.67 per kwh.
The power generation companies already sounded off that they are not inclined to agree to the “payment deferment proposal” because this will also obliterate their respective financial stature and could hamper their operations.
Most vulnerable to this dilemma would be the diesel plants which will be in need of immediate cash for fuel purchases.
Petilla advanced proposal that the government would do the fuel procurement for the diesel facilities. However, the energy chief could be smacked with legal hurdles if he will re-align government funding for private enterprises. source
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