Meralco acts to mitigate tight electricity supply

MANILA, Philippines — The Manila Electric Co. (Meralco) is putting in place measures to mitigate the impact of the expected tight power supply in Luzon this summer.

Meralco vice president and head of utility economics department Lawrence Fernandez said the initiatives being undertaken aims to address both the supply and demand aspects.

“In coordination with all stakeholders in the power sector, Meralco has been cooperating with the Department of Energy (DOE) for various measures to mitigate the potential effect of tight supply, especially for summer 2023,” Fernandez said.

On the supply side, Fernandez said Meralco is conducting two biddings for short-term power supply agreements, one for 180 megawatts and another for 300 MW.

The supply covers two Competitive Selection Process (CSP) involving Meralco’s 300-MW peaking requirement from Feb. 26 to July 25 and 180-MW baseload supply from Feb. 26, 2023 to Feb. 25, 2024.

“So hopefully that will also shield Meralco customers from spot market prices,” Fernandez said.

On the demand side, Fernandez said Meralco is seeking to attract more large end users to participate in the Interruptible Load Program (ILP).

The ILP is a demand-side management program led by the DOE and Energy Regulatory Commission (ERC) wherein participants will be asked to temporarily de-load from the grid and use their generator sets when there is supply deficiency and power interruptions are imminent.

Pre-enrolled customers who go temporarily off the grid are entitled to fuel compensation covering the hours when the red alert was raised, in accordance with a formula approved by the ERC.

Last year, Meralco said 72 business establishments enrolled under the ILP were instrumental in ensuring the continuous supply of electricity in its franchise area when the Luzon grid was placed on red alert in September.

As part of its demand side initiatives, Fernandez said the power distributor is also collaborating with the DOE for a communications plan for energy efficiency.

With power rates increasing, Meralco has advised its customers to continue practicing energy efficiency to better manage their electricity consumption.

“We’re encouraging customers through a more strengthened communication plan to exercise energy efficiency,” Fernandez said.

The DOE has been pushing for demand-side management programs for various sectors to help ease the expected tightness of supply in the summer months.

These programs are focused on the utilization of efficient equipment and appliances, as well as the promotion and implementation of policies and programs that best fit each industry.

For the commercial sector, the utilization of energy-efficient equipment, such as inverter-type air conditioners and LED lightings is promoted, while programs for the industrial sector are designed to maximize the intensive energy needed for its operations, such as the utilization of highly efficient motors, variable frequency drives, and interruptible/curtailable agreements to electricity suppliers.

As for the residential sector, programs include the promotion of energy-efficient appliances.

“We should look at demand-side management as a necessary element in managing our entire power supply. If our consumption becomes more efficient, that means we will no longer have to run diesel-fired power plants that are more expensive,” Energy Secretary Raphael Lotilla said last week.

“We should not look at demand-side management as only a band-aid solution. Instead, it should be a natural element embedded already in our entire management system,” he said.

Based on its latest 2023 outlook, which factors in the projected forced outage ranging from 500 to 600 MW for the entire year along with the operation of existing and committed power plants, the DOE expects the Luzon grid to encounter yellow alerts possibly for several weeks, including the entire month of May.

A yellow alert will be raised when there are not enough reserves to cover the largest running generating unit at the time, but does not necessarily lead to power outages.

“For industry stakeholders, we’ll all work together to try to avoid the impact of any power supply tightness. So both on possible rotating brownouts and, more importantly, on the effect on spot market prices,” Fernandez said.

Meralco is the largest electric power distribution company and the biggest private sector utility in the country.

The company provides electric service within its franchise coverage and has a consolidated customer count of 7.6 million as of end-September 2022.