Meralco sees higher generation fee if electricity supply not augmented

Manila Bulletin
by James Loyola
April 4, 2014

Manila Electric Company (Meralco) expects its generation charge to rise by P0.70 per kilowatt hour in April and by P1.70 per Kwh in May due to the seasonally higher demand during the summer months.

“This is based on the estimated cost of supply from the power generators but it is of course subject to change depending on several factors,” said Meralco spokesman Joe Zaldarriaga.

He added that these projected rates will apply only if its three power supply agreements with Toledo Power Corporation, Panay Power Corporation, and 1590 Energy Corporation are not approved by the Energy Regulatory Commission.

If these are approved the rate hike may be lower since the power distributor will not have to procure as much from the Wholesale Electricity Spot Market.

Meralco has signed separate interim power supply agreements with Toledo Power for up to 28 MW of supply with an option for an additional 9 MW and Panay Power for up to 27 MW both covering the period April 1 to June 30, 2014.

It also executed an interim supply agreements with 1590 Energy Corporation for the purchase of up to 140 MW of capacity and associated energy output from the latter’s Bauang power plant.

Meralco said the agreements with the power suppliers shall be effective upon final approval of the Energy Regulatory Commission and shall expire on June 30, 2014.

“The IPSAs were entered into to address the increase in demand and mitigate the company’s exposure to the WESM during the summer months,” Meralco said.

Meanwhile, the Department of Energy (DOE) said it is in close coordination with distribution utilities (DUs) for the implementation of the Interruptible Load Program (ILP) in Luzon.

Given the rising power demand during summer, ILP is part of the country’s demand-side management program.

ILP serves as an option for DUs like Meralco and electric cooperatives to ask their big load customers to serve their own power needs by using their own generator sets in the event that all available mechanisms implemented to ensure supply are not enough to cover the demand for electricity.

Targeted ILP participants are those with large embedded generation capacities such as malls, large business establishments, and factories.

Energy Undersecretary Raul B. Aguilos said “we are encouraging the ILP as it provides distribution utilities such as Meralco an option of last resort to meet its power requirements.”

The use of ILP is contingent to the status of the grid and the choice of the DU. Based on established protocols, ILP is implemented during a red alert status (minimal power reserve) upon the notice of the National Grid Corporation of the Philippines (NGCP) and the DUs informing ILP participants to deload from the grid.

While the power situation in Luzon has improved at the start of the month as compared to March with the Ilijan Power Plant with 600 megawatts coming online earlier than scheduled, the supply situation remains tight as Luzon registers its highest annual demand during the summer months.

At present, Mindanao DUs have been employing the ILP to augment its power requirements. On the other hand, Visayas DUs relied on ILP to mitigate the impact of supply curtailment brought about by Typhoon Yolanda.

In addition, the DOE continues to encourage the public for the judicious use of power and practice energy efficiency measures not only during the summer period, but all throughout the year. source