DOE to dip hands into Meralco rate hike probe

Owing it to low-price signals set off by the Wholesale Electricity Spot Market (WESM), the Department of Energy (DOE) noted that it is keen on dipping its hands into the propounded investigation of the recent 0.42 per kilowatt hour (kwh) rate hike of the Manila Electric Company.

In a press conference, Energy Secretary Zenaida Y. Monsada noted that while the Energy Regulatory Commission (ERC) has the domain on rates regulation, “should there be a complaint, DOE should act on it and coordinate with the ERC.”

She added the “DOE will help in the investigation on the market (WESM) portion which is part of our jurisdiction.”

Monsada further qualified that they will look into the procurement level of Meralco in the spot market during the questioned supply month.

“If needed, we will have to look at the WESM purchases and what was the impact of that on the final rates billed to consumers,” the energy chief stressed.

It has to be recalled that the main trigger in Meralco’s rate uptick for February billing had been on higher generation charges.

The fundamental question being thrown against the utility firm, however, had been the root cause of such hike in generation charge given that fuel costs, including coal, had been on downtrend during the period.

Additionally, the average settlement prices in the WESM in January supply month had been lower by more than 2.00 per kilowatt hour. Although within that billing month, it was indicated that Meralco’s procurement from the spot market was at a low of 6.1 percent.

In its statement to the media, Meralco cited the maintenance shutdowns undertaken by Masinloc and Calaca coal-fired plants – of which capacities are under power supply agreements (PSAs) with the utility firm.

The ERC earlier noted that it will examine the “replacement power sourcing” of Meralco on those periods to validate if it had done so under the provisions of the PSAs – which mainly should have been anchored on “least cost option.”

The utility firm further noted that the re-pricing of gas for its contracted capacities from the First Gas plants had not also pulled down rates substantially because of the low dispatch of the plants.

Notably, global oil prices had collapsed at the sub-$30 per barrel in recent months because of mega-glut in supply. (MMV)