Meralco calls for new, reliable power plants

MANILA, Philippines — The construction of new and reliable power plants should be accelerated to avoid generation deficiencies and high electricity spot market prices during tight supply conditions, according to power distribution giant Manila Electric Co. (Meralco).

“As a couple of recommendations to avoid generation deficiencies and the high WESM (wholesale electricity spot market) prices that they bring, it is strongly recommended to quickly build new, efficient, and reliable power plants, both to supply energy and for reserves,” Meralco vice president and head of utility economics department Lawrence Fernandez said in a presentation during the a House Committee on Energy briefing yesterday.

Following two consecutive months of decline which saw a combined reduction of P0.9154 per kilowatt-hour, Meralco rates went up this month due to higher generation charge.

To reduce the generation charge, which accounts for more than half of the electric rate, Fernandez said customers should also be provided more options in the choice of the generation supplier by accelerating implementation of the Retail Competition and Open Access (RCOA) and Green Energy Option Program (GEOP).

RCOA creates an opportunity for customers with an average peak demand of at least 500 kilowatts (kW) to secure retail supply contracts from licensed retail electricity suppliers (RES) or local RES.

Fernandez said a total of 1,394 customers within the Meralco franchise area have joined the contestable market.

Meanwhile, customers with an average demand for the past 12 months of at least 100 kW may opt to join GEOP and contract with RES for 100 percent renewable energy supply.

As of last month, Fernandez said there have been 94 successful GEOP switchers within the Meralco franchise area.

Meralco said delays in transmission and distribution projects should likewise be avoided to support the entry of new power plants and maintain grid reliability and power quality.

“We should also support the transmission and distribution utilities to avoid delays in the corresponding projects to connect these power plants to support the entry of new generation capacity,” Fernandez said.

“And also, to empower customers and provide them flexibility in the management of their consumption and enable greater choice in supplier, we have been proposing to speed up the modernization of distribution utility, not just for Meralco, but for all utilities in the Philippines, to the rollout of advanced metering infrastructure (AMI) so that we can all deliver better service for our customers, improved energy efficiency, and also enhanced reliability in the distribution network,” he said.

The AMI, according to Meralco, empowers customers with real-time information, a platform for retail choice programs, a live link to the distribution utility for faster service, and a safer and more resilient network.

Fernandez said Meralco’s average electricity rate in real terms has gone down since the passage of EPIRA and its service to customers has been well within the performance standards set by the Energy Regulatory Commission.

However, rates have gone up this year due to the surge in international fuel process, peso depreciation, and higher WESM prices, he said.