Meralco sees higher summer demand, calls on firms to help

Business World Online
Posted on April 03, 2014 10:12:17 PM
By Claire-Ann C. Feliciano, Reporter

MANILA ELECTRIC CO. (Meralco) is seeking the help of large power users in bid to address supply issues during the hot summer months.
With demand expected to rise, the distribution utility, in a statement, said it was “taking necessary measures to help ensure that there will be continuous supply of power to its customers this summer season...”.

“For 2014, Meralco projects demand to increase by about 4% from last year’s level,” it noted.

Meralco said it would be implementing an interruptible load program (ILP) where “customers with large loads, like commercial establishments, will be asked to operate their own generator sets if the grid operator projects a need to augment generation capacity in the Luzon grid.”

“Through this, the aggregate demand for power from the system will be reduced to a more manageable level, helping ensure the availability of supply during the season.”

Meralco said it had invited over 100 companies to participate in the program.

“With the ILP, power supply from the grid that will not be consumed by participating customers will be available for use by other customers within the franchise area,” explained Larry S. Fernandez, Meralco senior assistant vice president and utility economics head.

“We are constantly updating the relevant agencies for a seamless implementation of ILP,” he added, noting this was being done in cooperation with the Energy department.

Besides the ILP, Meralco has also filed separate applications with the Energy Regulatory Commission (ERC) for two interim power supply agreements (IPSAs).

The first IPSA is with two subsidiaries of Global Business Power Corp.: Toledo Power Co. (TPC) and Panay Power Corp. (PPC); while the second one is with 1590 Energy Corp., a unit of listed Vivant Corp.

Meralco said the deal with TPC involved the supply of up to 28 megawatts (MW) and option for additional nine; while that with PPC provides for 27 MW. Both deals will be effective from April 1 to June 30.

TPC owns two power facilities in Cebu: the 60-MW coal-fired Sangi and the 40-MW Carmen power station fueled by diesel. PPC, meanwhile, owns and operates a 72-MW diesel plant in La Paz, Iloilo City.

The agreement with 1590 Energy, meanwhile, involves the purchase of up to 140 MW from the 225-MW Bauang diesel power plant in La Union -- effective to June 30.

“The IPSAs were entered into to address the increase in demand and mitigate the company’s exposure to the Wholesale Electricity Spot Market (WESM) during the summer,” Meralco said.

Last month, the Energy department warned that the supplies could affect electricity prices.

“If there is a tight supply, prices usually shoot up. But it should be noted that [sourcing power from] WESM is optional. What will be the effect of the WESM price movements to the electric cooperatives and Meralco will depend on how much they are going to buy from there,” Energy Secretary Carlos Jericho L. Petilla said.

Meralco, which supplies power to Metro Manila and the provinces of Bulacan, Cavite and Rizal as well as parts of Batangas, Laguna, Quezon and Pampanga, saw its shares shed 20 centavos or 0.07% to end at P291 apiece yesterday from Wednesday.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by Philippine Long Distance Telephone Co. (PLDT). Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld. source