‘August power rates to reflect tight supply’

Business Mirror
by Lenie Lectura - August 4, 2015 

The Manila Electric Co. (Meralco) said the generation charge for the month of July, which will be reflected in consumers’ August power bills, should reflect, in part, the tight supply experienced last month.

Meralco Utility Economics Head Larry S. Fernandez said there were several periods of yellow alerts in July that will be properly reflected in customers’ bills in August. “There are upward pressures because of the numerous yellow and one red alerts at the start of the month,” the Meralco official said in a text message.

A yellow alert means thin power reserves. This is issued when power reserves dwindle and fall below 647 megawatts (MW). A yellow alert does not necessarily mean power outages or blackouts, but the situation could turn to a red alert, which means power outages are likely to occur.

The yellow alert issued by the National Grid Corp. of the Philippines (NGCP) was a result of unscheduled shutdowns of some power plants in Luzon and the gas-flow restrictions at the Malampaya facility.

Fernandez said there were instances when the gas flow from the Malampaya facility was restricted, prompting the power plants fed by natural gas to shift to liquid fuel, which is more expensive than gas.

“The intermittent Malampaya restrictions also meant First Gas plants resorted to use of liquid fuel, while the scheduled maintenance of Ilijan Block A led to a much lower dispatch of Ilijan,” Fernandez said.

The Malampaya facility fuels the 1,200-megawatt (MW) Ilijan, the 1,000-MW Santa Rita and the 500-MW San Lorenzo natural-gas plants, which provide around 40 percent of Meralco’s supply requirements. The San Lorenzo and the Santa Rita power plants are owned by the Lopez Group.

But Fernandez could not yet say the actual generation charge, which is a major component of a Meralco bill, that will be reflected in electricity bills in August. He said Meralco would need to wait for all the billings from its suppliers to have an actual view of rates for August.

“However, we are also awaiting the quarterly repricing of the Malampaya natural gas. We’ll know with more certainty as the bills come in, and plan to announce the August rates on Thursday,” Fernandez said.

Meralco said it does not earn from the pass-through charges, such as the generation and transmission. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to NGCP. Of the total bill, only the distribution, supply and metering charges accrue to Meralco.

Meralco stressed that, if necessary, it is prepared to call on its Interruptible Load Program (ILP) participants.

“They are being notified in cases when a yellow alert is issued and are asked to confirm readiness to activate, if needed,” Fernandez added.

Under the ILP scheme, big power users are asked to run their own generators when supply is short, particularly in the summer months, instead of getting their power from the Luzon grid. In exchange, they will be compensated for their fuel costs.

The electricity that would not be taken from the grid would be available to households and other users, sparing them from rotating blackouts.

The ILP program, however, is a volunteer program. source