Consumers warned of soaring electric bills in summer months
By Myrna M. Velasco – March 13, 2022, 8:30 PM
from Manila Bulletin
Soaring electric bills in summer months seen
Summer months may just get hotter as soaring electric bills could further erode the purchasing power of Filipino consumers and thin power supply could also push Luzon grid into brownout breaking points.
As global fuel prices are on sustained astronomical spikes, Filipino consumers are being warned this early that their electric bills could soar within the summer-months stretch – primarily in April and May as higher prices of coal and gas must have already been reflected in the billing cycles.
Rate hikes then will just aggravate predicaments of thinning power reserves in the system that could then trigger rotational blackouts or brownouts, especially for Luzon grid, if the recurring malady of forced outages of power plants will exhaust power grids again.
In a media briefing, Manila Electric Company (Meralco) Vice President Lawrence S. Fernandez acknowledged the astronomical rise in coal prices that had gone above $440 per tonne while the swelling oil prices will also have its impact on Malampaya gas-repricing by April.
“Coal is used for power generation, so if coal prices will go up, the cost of generation will also increase and that will be reflected in the generation charge,” the Meralco executive said.
The generation charge is a separate line item in the electric bills; and this accounts for roughly 55 to 60-percent of the overall costs shouldered by consumers in their monthly payments for electricity consumption.
On the quarterly repricing for Malampaya fuel that is fed into the country’s gas plants, Fernandez noted that this is oil price-linked to the Dubai crude, which is the fuel pricing benchmark for the Asian oil markets.
“On the part of Meralco, the biggest source of supply has been coming from the power plants using Malampaya gas. Then the price of Malampaya gas is affected by world crude oil prices, and we’ve been seeing in the past few days that world oil prices have been rising, so that will eventually be reflected in the generation cost,” he stressed.
Fernandez expounded that the gas re-pricing exercise will happen next month, hence, the cost uptick impact will be felt by consumers in the May billing period.
“So if there is any effect in the increase in world crude oil prices, we will feel it in the Malampaya prices starting May generation charge,” the Meralco executive reiterated.
Apart from the synchronous surge in coal, gas and oil prices globally, electricity rates in the country will likewise be affected by the ferocious foreign exchange (forex) rate fluctuation; as the Philippine peso had already fallen beyond P52 versus the greenback.
Another power cost influencing factor being monitored by Meralco is regulatory action on the bid of power generators on suspension of the secondary price cap (SCP) at the Wholesale Electricity Spot Market (WESM).
Fernandez emphasized that the secondary price cap of P6.245 per kilowatt hour (kWh) serves as a cushion to sustained price hikes in the spot market; but if that will be scrapped especially during the thin supply-wrenched summer months, it’s all the more that consumers will be distressed with mega-hikes in power rates.
“In general, the secondary price cap was meant to mitigate the impact of sustained high WESM prices, so if there is any suspension of the secondary price cap, then we may see more spikes in prices in the spot market,” Fernandez stated.
