‘Expensive’ replacement power hikes Meralco rates
By Myrna M. Velasco – January 10, 2023, 2:03 PM
from Manila Bulletin
The comparatively expensive replacement power capacities secured from a power plant of the Aboitiz group and hefty purchases from the Wholesale Electricity Spot Market (WESM) had partly driven up the overall electricity rate of Manila Electric Company (Meralco), as rates went up by P0.6232 per kilowatt hour (kWh) in the January billing.
Meralco announced that its tariff for this billing cycle will climb to P10.9001 per kWh versus the previous month’s P10.2769 per kWh.
For residential end-users in the 200-kWh consumption band, the total increase that they will experience in their January bills would be P124.64, while those using 300kWh will endure aggregate increase of P186.96, according to Meralco.
The power firm indicated its generation charge jacked up by P0.3316 to P7.1291 per kWh in January billing compared to last month’s P6.7975 per kWh – and that had been mainly traced to procurements of costlier replacement power to fill capacity gap arising from supply cessation of 670MW capacity from the Ilijan gas plant of the San Miguel group; as well as the higher charges billed by the contracted independent power producers (IPPs) of Meralco.
For the other cost items in the January billed rate, the power firm reported that the transmission charge for residential customers had been down by P0.0314 per kWh, on account of lower cost ancillary services utilized by system operator National Grid Corporation of the Philippines (NGCP); while taxes and other charges logged an increase of P0.0469 per kWh.
To recall, Meralco sealed an emergency power supply agreement (EPSA) with the Aboitiz group last month for 300MW capacity to be supplied from its Dinginin coal-fired power plant; and the agreed tariff has been higher than the previous contract that Meralco had with South Premiere Power Corporation (SPPC), a subsidiary of San Miguel that owns and manages the Ilijan plant.
Further, the power firm was compelled to secure the balance of 370MW capacity from the Wholesale Electricity Spot Market (WESM), wherein settlement prices had also swelled by P0.6808 per kWh in the last supply month.
“To shield customers from exposure to volatile WESM prices, Meralco on December 15, 2022 executed an emergency power supply agreement (EPSA) with GNPower Dinginin Ltd. effective until January 25, 2023. The EPSA covers 300MW baseload capacity and partially replaced the capacity under the suspended PSA with SPPC,” Meralco said.
The power utility similarly emphasized it was “constrained to source the remaining 370MW from WESM following the lack or withdrawal of offers for emergency supply from other power generation companies.”
Meralco noted that the spike in WESM prices had been “due to the tight supply conditions in the Luzon grid” as the main power system was placed on ‘yellow alert’ for three days in December; while “persistently high spot prices triggered the imposition of the secondary price cap 61 percent of the time, compared to 21 percent in November.”
Aggravating this month’s rate hike had been the P0.4070 per kWh uptrend in the charges of the utility firm’s contracted independent power producers.
Meralco stated the upward adjustment was “mainly due to the increased use of more expensive alternative fuel by First Gas Sta. Rita and San Lorenzo as a result of insufficient supply of Malampaya natural gas.”
The company qualified though that the appreciation of the Philippine peso versus the US dollar somehow eased what could have been expected as heftier rate hike given the fact that roughly 97 percent of IPP costs are greenback-denominated.
Conversely, the charges of Meralco’s power supply agreements (PSAs) softened by P0.2710 per kWh “due to higher share of excess energy deliveries, which are priced at a discount, and the appreciation of the peso against the dollar.”
In this billing period, the P0.0364 per kWh feed-in-tariff allowance (FIT-All) line item is suspended, as earlier mandated by the Energy Regulatory Commission.
