Staggered payments for power rate hike

Manila Electric Co. (Meralco) is proposing to stagger the implementation of the expected power rate hike following the Malampaya shutdown over a period of three months to minimize the burden on consumers.

The power distributor has filed an application with the Energy Regulatory Commission (ERC) to stagger the recovery of the generation charge from consumers starting March until May.

Meralco’s overall rate for the March billing is expected to increase by about 91.74¢ per kilowatt-hour (kwh).

The power distributor has proposed to impose a generation charge of 30¢ per kwh in March and April, and the remaining balance in May 2017.

It is also seeking approval to defer payments to power suppliers in accordance with the proposed recovery of the generation charge from customers.

“Our filing is to lessen the impact on consumers’ bills, not a one- time hit,” Meralco SVP and head of customer retail services and corporate communications Alfredo Panlilio said.

In its petition, Meralco said natural gas plants will be running on alternative fuels which are more expensive than the gas being supplied by the Malampaya natural gas facility, which is undergoing maintenance from Jan. 28 to Feb. 16.

This means gas supply for Luzon’s major natural gas plants, namely the Ilijan, Sta. Rita plant, San Lorenzo, San Gabriel and Avion plants – which supply 3,211 megawatts (MW) to the Luzon grid of which 2,565 MW is supplied to the Meralco franchise area – will be affected.

The Department of Energy (DOE) said earlier Ilijan Unit 2, Sta. Rita, San Lorenzo and Avion plants would be using alternative fuel to continue operation and generate electricity during the maintenance period.

Natural gas fuel only costs around P4 per kwh and using replacement fuel, such as diesel, would double costs to P6 to P8 per kwh.

Meanwhile, Unit 1 of SemCalaca Power Corp. and Quezon Power (Philippines) Ltd. – which supply 585 MW – will also go on scheduled outage, requiring the distribution utility to source requirements from the electricity spot market.

As part of miitgating measures, the government-owned 470- MW Malaya Thermal Power Plant in Pililia, Rizal will also be running during the Malampaya maintenance period.

Interruptible Load Program (ILP) participants with a total of 900 MW will also be tapped in case of power shortage.

For this month, Meralco expects a rate increase due to the maintenance of some power plants, higher fuel costs and increase in transmission charges, Meralco senior vice president and head of utility economics Larry Fernandez said in a text message.

“Coming from a record low in January, we expect an increase in the generation charge due to: normalization of capacity fees from Pagbilao and Ilijan, lower dispatch of plants that went on maintenance (Calaca, Masinloc, and First Gas-Sta Rita), and higher fuel costs,” he said.