Meralco explains outages; assures public supply’s ok

By Lenie Lectura May 11, 2020
https://businessmirror.com.ph/2020/05/11/meralco-explains-outages-assures-public-supplys-ok/

THE Manila Electric Company (Meralco) said power supply is sufficient with no signs of yellow or red alert notice.

“With sharp decline in demand due to ECQ [enhanced community quarantine], we’re not seeing yellow and red alerts in the coming months. In fact, we have huge buffer of power supply in the coming months,” Meralco head of networks Ronnie Aperocho said at a recent virtual meeting of the company’s first-quarter financial and operating results.

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

A red alert notice is raised when there is severe power deficiency and zero contingency reserve. When the red alert is issued, power interruptions are expected to happen.

The ECQ peak demand of Meralco dropped by almost 40 percent to a low of 4,516 MW in March 2020 and further to 4,289 MW in April 2020, the company reported.

Based on the second-quarter Luzon Demand-Supply Outlook presented by Meralco last month, the grid’s available capacity stands at 11,201 MW every week of May.

Demand, on the other hand, is expected to reach 8,325 MW on Week 1; then, 8,337 MW on Week 2; and 8,370 MW on Week 3; and finally, 8,245 MW on Week 4.

Based on this data, there is a reserve of 2,876 MW on Week 1; 2,864 MW on Week 2; 2,831 MW on Week 3; and 2,956 MW on Week 4.

In June, the gross power reserve is expected to hit over 3,000 MW as available capacity is estimated at 11,569 MW every week.

Demand for the first week of June could hit 8,367 MW; 8,266 MW on the second week; 8,319 MW on the third week; and 8,397 MW on the fourth week. This leaves a gross reserve of 3,202 MW on Week 1; 3,303 MW on Week 2; 3,250 MW on Week 3; and 3,172 MW on Week 4.

Meralco attributed recent power outages in some parts of its franchise area to transformer overload and not because of inadequate supply.
Electricity rates

Meanwhile, electricity rates for a typical household fell this month by P0.2483 per kilowatt hour (kWh), from last month’s P8.9951 per kWh to P8.7468 per kWh this May. This is equivalent to a reduction of around P50 in the total bill of residential customers consuming 200 kWh.

The reduction was brought about by lower generation charge as Meralco claimed force majeure from power suppliers, resulting in reduced fixed cost for certain baseload plants and suspension of mid-merit and peaking supply contracts.

These claims reduced the May 2020 generation charges to P4.3848 per kWh from P4.6385 per kWh last April.

“Because of the very significant reduction in power demand in its service area during the ECQ period, Meralco invoked the force majeure provision in its Power Supply Agreements (PSAs) for the duration of the lockdown, reducing fixed charges for generation capacity that would have been charged by suppliers,” Meralco said.

April’s generation charge reflected a P129-million reduction in fixed costs due to Meralco’s force majeure claim. This May, the force majeure claim totaled P877 million, equivalent to savings of P0.3452 per kWh, representing reduction in fixed costs and avoided charges from the temporary suspension of the mid-merit supply contracts recently approved by the Energy Regulatory Commission (ERC). For both April and May billing months, the reduction due to force majeure claim totaled to more than P1 billion.

PSA charges decreased by P0.2116 per kWh mainly due to the company’s force majeure claim. Cost of power from Independent Power Producers (IPPs) also decreased by P0.6418 per kWh due to higher average plant dispatch, lower fuel prices and peso appreciation. PSAs and IPPs accounted for 52 percent and 46 percent of total supply, respectively.

Meanwhile, charges from the Wholesale Electricity Spot Market (WESM) increased by P1.8502 per kWh due to the included line rentals related to Meralco’s supply contracts. The share of WESM to Meralco’s supply needs was less than 2 percent.

Meralco also reported that there was no movement for the Feed-In-Tariff Allowance (FIT-All) for May as the ERC ordered another month of deferral of the FIT-All in consideration of the current ECQ.

Meanwhile, transmission charge registered a slight increase in May by P0.0175 per kWh due to higher ancillary charges, while taxes and other charges registered a net decrease of P0.0121 per kWh.

Meralco’s distribution, supply and metering charges, meanwhile, have remained unchanged for 58 months, after these registered reductions in July 2015. It reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the NGCP. Taxes and other public policy charges like the Universal Charges and the FIT-All are remitted to the government.