Malampaya shutdown to hike Meralco bills in March
By Myrna M. Velasco – March 5, 2023, 6:52 PM
from Manila Bulletin
Price shock for roughly 7.6 million customers of Manila Electric Company (Meralco) is anticipated in the March billing cycle, with forecasts of higher generation charge triggered by the maintenance shutdown of the Malampaya gas production facility as well as the resulting spikes in settlement prices at the Wholesale Electricity Spot Market.
“Based on initial indications, we are seeing a generation charge increase for this month,” Meralco Vice President and Head of Corporate Communications Joe Zaldarriaga indicated.
The generation charge accounts for more than 65% of the cost component in the monthly pass-on tariff of the utility firm; while the distribution charge that goes directly to Meralco only accounts for 8.0 to 9.0-percent.
He explained the projected rate hike “is mainly due to the two-week maintenance shutdown of the Malampaya facility, which led to the use of more expensive alternative fuel by the Sta. Rita and San Lorenzo power plants.” The maintenance downtime for the facility was slated February 4-18 this year.
Zaldarriaga further noted “the shutdown also affected supply condition in the Luzon grid, which led to higher bid prices in the spot market.”
The Meralco executive qualified though that the utility firm is still waiting for the submission of final invoices from its power suppliers, hence, there is no firm figure yet on the projected rate adjustment that will be reflected on its March billing.
Apart from the Malampaya-induced rate escalation and high WESM prices, it is also manifest that Meralco secured supply at a much higher rate of P8.5250 per kilowatt hour (a fuel pass-through contract inclusive of ancillary services and value added tax) from its emergency power supply agreement (EPSA) with the Dinginin coal-fired power plant, a joint venture of the Ayala-Aboitiz group.
The 300-megawatt capacity procured from the Dinginin generating facility within January 26-February 25 period served as a replacement to the Ilijan capacity, of which supply to Meralco had been stopped following the injunctive relief issued by the Court of Appeals. The fixed price contract of the Ilijan plant to Meralco had been pegged at all-in P4.93 per kilowatt hour (kWh) levelized cost of energy (LCOE), inclusive of taxes.
Relative to the cost impact of the Malampaya shutdown, Zaldarriaga said “we are currently exploring options to cushion the impact of the looming higher cost on our customers’ power bills,” and that includes seeking imprimatur of the Energy Regulatory Commission (ERC) for possible staggered pass-on of the increase from the downtime of the gas production facility, similar to what had been done in the past years when the same activity had been carried out.
Essentially, the rate uptick precipitated by the Malampaya shutdown would debunk the earlier ‘best case scenario’ that was seen by Department of Energy (DOE) in its crystal ball, with it projecting a ‘no rate hike’ arising from that event.
Given forecast of tight supply in the Luzon grid during the summer months, it is widely expected that consumers will have to bear the pain of high electric bills for several billing cycles.
There are no concrete remedies being laid down by energy policymakers yet on how the country’s short-term predicament of strained power supply will be addressed; and how the never-ending complaints of exorbitant electricity bills will be mollified.
Instead, the priority of the DOE officials is to cement the long-term solutions for the country’s energy future – and that will lean mainly on renewable energy (RE) installations.
