Malampaya shutdown next month to push up rates by over 11.00/kwh

The scheduled maintenance shutdown of the Malamapaya gas production facility by next month will likely drive up power rates for customers of Manila Electric Company (Meralco) by more than R1.00 per kilowatt hour (kwh).

That had been based on the initial estimate of the utility firm, but subject to validation of the cost submissions and assumptions on fuel shift resorted to by its contracted capacities that are gas-fed.

The cost impact calculations will be submitted to the Department of Energy (DOE) in a meeting that was convened by the agency this Thursday (December 22) for all concerned and affected stakeholders.

The gas facility will be on its 20-day maintenance downtime from January 20 to February 16 next year. Patently, this is a shorter maintenance duration but the country’s biggest distribution firm reckoned that it could still trigger rate hikes that will likely reflect in March – in consideration of the billing lag time.

Meralco Spokesperson Joe Zaldarriaga said “this may have an effect on the generation charge cost in March given that the schedule will impact on the February supply month.”

He had not given figure on the anticipated power rate hike, but industry sources hinted there are already rate hike simulations drawn up by the utility firm.

Meralco said the upward power rate adjustment may even be heftier if the proposed increase in fuel excise tax (from currently at zero-percent level) will already be enforced within the period.

For diesel, that will translate to cost hike of R6.00 per liter and when the fuel is utilized for power generation, the resulting increase in electricity costs will be at estimated R1.50 per kwh for diesel-fired power plants. This then could be applied to the

Ilijan plant if it shifts fuel use to biodesel during the Malampaya shutdown.

There have been several plants that came on-line since last year, but Meralco indicated the cost impact may not be cushioned as much because the new capacities are also coming from gas plants.

Meralco Vice President Lawrence S. Fernandez said “some of the additional supply is also dependent on Malampaya” – like the San Gabriel and Avion plants of First Gen Corporation.

The most controversial shutdown episode of the Malampaya gas production platform had been in 2013 – and that ignited some sort of “social revolt” when Meralco’s rates had been up by R4.50 to more than R5.00 per kWh for two billing months.

The pass-on to consumers of the prohibitive cost adjustments never happened though because of a restraining order issued then by the Supreme Court.