Meralco sounds supply alarm
‘Indications point to an increase in generation charges due ‘mainly to higher Wholesale Electricity Spot Market prices resulting from a tight supply condition as power demand surges with higher heat indices’
Power consumers across the Manila Electric Co. (Meralco) franchise area may have to endure higher electricity expenses this month amid an expected spike in spot market prices brought about by the dwindling power supply.
Meralco vice president and head of Corporate Communications Joe R. Zaldarriaga said on Thursday that initial indications point to an increase in generation charges.
“This is mainly due to higher Wholesale Electricity Spot Market prices brought about by the tight supply condition, as power demand surged along with higher heat indices,” Zaldarriaga said in a text message.
Zaldarriaga pointed out that the peak demand in Luzon this month has significantly increased to about 2,400 megawatts (MW) compared to the recorded demand in March.
Practice energy efficiency
“In April alone, the Luzon grid recorded six days of yellow and five days of Red alerts in April. We continue to remind the public to practice energy efficiency to have better management over their power consumption and electricity bills,” he said.
Meralco customers enjoyed almost a peso cut in their respective power bills this month due to the reduction in both generation and transmission charges.
April’s electricity rate was down by 99 centavos per kilowatt-hour (kWh) to P10.95 per kWh from P11.94 per kWh in March.
The price adjustment was equivalent to a P198 reduction in the total electricity bill for every residential household consuming 200 kWh.
No choice
Relatedly, Meralco first vice president and Regulatory Management head Jose Ronald Valles said in a recent interview that the company was left with no choice but to source as much as 260 MW of power supply from the WESM, which could trigger a rate spike, due to failed biddings.
A 260 MW peaking requirement, scheduled to be contracted by July, is needed to complement the 1,000 MW and 400 MW worth of power supply agreements (PSA) to ensure that the spiking demand will be covered.
Historically, WESM electricity prices surge due to unscheduled outages of power plants caused by the extreme temperatures prevalent during the summer months.
Meralco intended to enter into a bilateral contract with San Roque Hydropower Inc., the sole bidder in the recent failed biddings. However, the generator had to withdraw its offer due to an inability in generating a substantial portion of the targeted peaking contract capacity amid El Niño.
Aside from contracting supply from the WESM, Valles said Meraclo can also utilize the 400 MW PSA with Limay Power Inc. for P6.2708 per kWh inclusive of value-added tax and line rental.
However, it cannot be dispatched as it has yet to receive a provisional authority from the Energy Regulatory Commission, which Meralco hopes to receive soon.