Higher generation charge to raise power rates in April–Meralco exec

By Lenie Lectura - April 3, 2019

https://businessmirror.com.ph/2019/04/03/higher-generation-charge-to-raise-power-rates-in-april-meralco-exec/

Generation charge may go up this month after electricity price at the power market last month hit over P12 per kilowatt hour (kWh), the highest for the year.

The Luzon grid, meanwhile, was placed on yellow alert for three days early last month, mainly due to inefficient reserves brought about by forced power plant outage.

“During the first week of March, when we had a series of yellow alerts, the Load Weighted Average Prices [LWAPs] in the spot market reached as high as P12 per kWh,” said Meralco Utility Economics Head Lawrence Fernandez in an interview.

Citing Wholesale Electricity Spot Market (WESM) data, Fernandez said the LWAPs for March 4 and 5 were the highest so far for the year. “It was P12.698/kWh in March 4, and P11.685 per kWh in March 5,” he said.

In the absence of a yellow alert, the LWAPs normally reach about P7 per kWh. “In the immediately preceding week, the highest daily LWAP was only P7.327 per kWh. The highest daily LWAP was only P7.48 per kWh,” said Fernandez.

Meralco will soon be able to calculate the impact of these yellow alerts in the April power bills soon. It is set to announce next week the power rates for this month.

Meralco partly sources its power requirements from the WESM. Any adjustment in the cost of power purchased by Meralco is reflected in the generation component of an electric bill.

Whenever a yellow alert is issued, this has an impact on WESM prices. “The recent yellow alerts were partly due to power plant outages. This meant there was less supply available to meet demand, hence, leading to upward pressure on spot market prices,” explained Fernandez.

A yellow alert is issued when operating reserves have dropped below the required 647 megawatt contingency in Luzon, or equivalent to the largest unit in Luzon, which is the 647 MW coal-fired power plant in Sual, Pangasinan.

“If there is deficiency in reserves, usually spot market prices tend to go up. There is pressure. When this happens, gen[eration] charge could go up,” Fernandez earlier explained. However, power sourced from WESM is only one factor that impacts Meralco’s generation charge.

It can be recalled that the March power bills of Meralco increased by P0.0894 per kWh mainly due to higher spot market prices and cost of power purchased from Independent Power Producers (IPPs).

The utility firm reported then that charges from the WESM went up by P0.5178 per kWh due to tighter supply conditions in Luzon with higher demand for power and more frequent plant outages.

As result, consumers paid P10.4961 per kWh in overall power rates last month compared to February’s overall electricity rate of P10.4067 per kWh. The upward adjustment resulted in an increase of around P18 in the March total bill of a typical household consuming 200 kWh.

Meanwhile, the Luzon grid was again placed on yellow alert for two consecutive days this April, owing to thin power reserves.

The National Grid Corp. of the Philippines (NGCP) issued the yellow alert for Luzon at 11 a.m., and from 2 p.m. to 4 p.m. on April 2.

The yellow alert was issued “due to insufficient operating reserve brought about by the high system demand and the forced outage of Pagbilao 3 (420 MW). Other generators still on unplanned outage are: Masinloc 2 (344MW), Pagbilao 1 (382MW), SLTEC 1 (150MW) and Malaya 2 (350MW)

The NGCP said the power capacity shaved off from Luzon due to unplanned plant shutdown reached 1646 MW. There were also two power plants that did not deliver their full capacity. The derated plants are Calaca 2 at 200 MW from its declared 300 MW capacity, and SLPGC 2 at 100 MW from 150 MW.

Last April 1, Luzon was also placed on yellow alert at 11 a.m., and from 2 p.m. to 4 p.m. for the same reasons.

The other day, consumer group Laban Konsyumer Inc. (LKI) called for more transparency from the Department of Energy (DOE) and the Energy Regulatory Commission (ERC) during instances of power plant outages.

The group sought for daily updates on the status of power plants so that consumers can monitor the power situation of the grid on a daily basis. LKI President Victor Dimagiba highlighted the need for information regarding the yellow and red alert statuses.

Dimagiba wrote the ERC on January 27, 2019, and proposed that the commission conducts the real-time review of rate adjustments, and inform the consumers that the adjustments are in compliance of the rate adjustment mechanism guidelines.

“The greater transparency and sharing of information to the consumers by the commission is very important. We observed that the Meralco conducts a monthly briefing on power rates, but we hardly hear the commission, the NGCP, the spot market operator and the generating plants inform consumers of their power rates,” he said.

“We sincerely propose that the Commission introduce meaningful changes on ensuring the consumers right to accurate and timely information on matters relating to power rate,” Dimagiba added.