Oil, electricity prices on the upswing

posted May 31, 2021 at 12:35 am by Alena Mae S. Flores and Rio N. Araja
https://manilastandard.net/mobile/article/355872

Oil prices are forecast to go up this week while power rates are expected to rise in June.

Unioil Philippines forecast oil prices to go up by as much as P0.70 per liter to reflect the movement of prices in the world market week-on-week.

"Expect fuel prices to go up next week (June 1 - 7, 2021). Diesel will increase by P0.40 to P0.50 per liter. Gasoline will increase by P0.60 to P0.70 per liter," Unioil said in its advisory.

On May 25, the oil companies also raised pump prices.

Gasoline and diesel prices went up by P0.15 per liter and P0.25 per liter, respectively.

However, the oil firms cut the price of kerosene by P0.15 per liter.

These resulted in a total net increase of P8.50 per liter for gasoline, P7.20 per liter for diesel and P5.85 per liter for kerosene since the start of the year.

World oil prices reacted to the increase in demand from China and anticipation of increased demand in Japan.

According to the Department of Energy, Russia and OPEC+ are ramping up oil production between May and July to gradually return over 1 million bpd (MMB/D) to the market.

In Southeast Asia, Malaysia and Vietnam posted soft demand due to the COVID-19 outbreak but Indonesia demand continues to hold up.

As this developed, Manila Electric Co., the country's biggest power distributor, sees an "upward pressure" on its generation charges for June due to higher rates at the electricity spot market.

"Currently, we still have to await the final bills from our power suppliers, but based on early, initial projections, there may be an upward pressure on the generation charge for the month of June 2021 due to observed increase in WESM prices," Meralco spokesperson Joe Zaldarriaga said, referring to the Wholesale Electricity Spot Market.

The average electricity prices at the WESM, the trading floor of electricity, surged in May to nearly P8 per kilowatt-hour on increased demand as the economy slowly recovers.

"With the increase in temperature and economic activity, the Luzon grid registered a new peak for the year at 11,556 megawatts," Zaldarriaga said.

He said average capacity on outage remained at the 3,000 MW level and the grid was placed on yellow alert on May 5, due to insufficient operating reserves.

"WESM prices were persistently high for extended periods triggering the secondary price cap on May 4-7 and 20-22," Zaldarriaga said.

"Meralco customers are still experiencing record low power rate levels, as this month’s overall rate was still lower than last year’s rate by P0.1548 per kWh. This was also the lowest rate for May since 2017," he said.

Zaldarriaga encouraged its more than seven million customers to continue practicing energy efficiency initiatives at home to manage their consumption, as the ongoing summer season may bring an increase in residential electricity consumption.

On Sunday, Bayan Muna Rep. Carlos Isagani Zarate on Sunday urged Meralco to extend its "no-disconnection" period for six months amid another hard lockdown and the collection of P15 convenience fee for an online transaction.

“The six/month extension of the no-disconnection period would be enough time for electricity consumers to be in a better position to pay their bills considering that many lost their jobs and are finding it hard to just put a meal on the table. Adding a convenience fee would just make it harder for electricity consumers to pay their bills," he said in a statement.

“Also consumers, especially now, need electricity to alleviate the extraordinary heat this summer. If they go out because their electricity was disconnected or just to save money by not paying the convenience fee, then it may cause the further spreading of the COVID-19 virus and other diseases," he added.

He lanented that despite the lockdowns due to the COVID-19 pandemic, Meralco was still able to earn P21.71 billion in power sales in 2020.

To extend the no-disconnection period and no-convenience fee collection for another six months would not bankrupt Meralco, he said.