Malampaya, outages weigh on power rates

posted February 06, 2019 at 08:00 pm
by  Ray S. Eñano
Electricity rates so far are displaying a less erratic behavior but they could act up if power generators and sources do not manage well their so-called maintenance shutdown.

Electricity consumers had a respite in January when the rates of Manila Electric Co. decreased to P9.8385 per kWh from P10.1803 per kWh in December. The downward adjustment of P0.3418 per kWh translated into savings of around P68 in the total monthly bill of a typical household consuming 200 kWh.

A lower generation charge from power producers contributed significantly to the lower electricity bill. From P5.3303 per kWh in December, the generation charge for January declined to P4.9119 per kWh, or a decrease of P0.4184 per kWh.

The decrease is mainly the result of a P1.2293 per kWh reduction in the cost of power from Meralco’s power supply agreements, or PSAs. The share of PSAs to Meralco’s total requirement in January stood at 40 percent. 

Electricity rates, however, fluctuate month by month and greatly depend on the supply of power or lack of it. Meralco customers, for instance, will face higher generation charges in February following the normalization of the “capacity fees” and higher outages in January.

“It will be higher than January. Similar to the past two or three years, after the generation charge reduction in January, there’s always normalization in February,” said Meralco head of utility economics Lawrence Fernandez.

Meralco’s power rates in January, according to him, declined because of the reduced capacity fees for the outage allowance from the power generators.

“If power plants do not use their outage allowance for the year, then by December they charge us lower or with no capacity fees, and that leads to the lower generation charge in January. Since we have a new calendar year starting January, then the capacity fees go back to normal and that will be reflected in the January generation charge,” Fernandez adds.

The Meralco official also noted that many power plants went on outage in the second half of January, resulting in higher prices in the Wholesale Electricity Spot Market.

“More than 3,300 MW [megawatts] of capacity went on outage, both forced outage and due to scheduled outages. We noticed that the spot market prices responded accordingly, meaning it went up. That might also affect the generation charge in February,” said Fernandez.

Malampaya factor

The scheduled maintenance shutdown of the Malampaya natural gas field in October this year, meanwhile, is worrisome. Malampaya supplies fuel to five natural gas power plants in Batangas province with a combined capacity of over 3,000 megawatts.

The Department of Energy this early is considering several measures to prevent price spikes during the expected shutdown of the Malampaya gas field in northwest Palawan. The maintenance schedule will affect the operations of the Sta. Rita, San Lorenzo, Ilijan, Avion and San Miguel natural gas power plants, all in Batangas.

Energy Secretary Alfonso Cusi wants to know as soon as possible the timeline of the shutdown so preparations can be made ahead.

“We don’t want to be unprepared. I want to know. What are (the) preparations, measures that will be undertaken (so) that there will be fuel for the plants that are dependent on them,” said the energy chief.

The Malampaya gas field shutdown, according to a source from the consortium operating the reservoir, would be “less than a week.” The Malampaya consortium is composed of Shell Philippines Exploration B.V., Chevron Malampaya LLC and state-owned PNOC Exploration Corp.

Meralco must prepare  for the Malampaya shutdown to prevent spikes in electricity rates. Fernandez has conceded the electricity retailer would be looking for other sources of power during the shutdown.

Power rates historically increase at the WESM, the country’s trading floor of electricity, during the Malampaya shutdown because of the tightness in supply.   

All stakeholders, according to Fernandez, will meet to ensure there is adequate supply and minimal impact on consumers.

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Topics: Ray Eñano , Malampaya , power rates , Electricity rates , Manila Electric Co. , Meralco
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