Meralco expects higher generation charge this month

MANILA, Philippines — Energy utility provider Manila Electric Co. (Meralco) said indications point to a higher generation charge this month as the Luzon grid was placed under red and yellow alerts with several power plants are either offline or running at a reduced capacity.

“This is mainly due to higher Wholesale Electricity Spot Market (WESM) prices brought about by the tight supply condition, as power demand surged along with higher heat indices,” Meralco said.

This means household consumers may expect a higher electricity rate this month.

“We continue to remind the public to practice energy efficiency to have better management over their power consumption and electricity bills,” Meralco said.

According to Meralco, the Luzon grid in April alone recorded six and five days of yellow and red alerts, respectively.

As of May 6, the National Grid Corp. of the Philippines said the Luzon grid was placed three times so far.

Last week, the Energy Regulatory Commission (ERC) suspended the WESM due to a series of red alerts in the Luzon and Visayas grids since April 16.

The ERC cited data from WESM indicating that average prices per day amid the high heat index went up by 11 and 53 percent in Luzon and the Visayas, respectively.

This prompted the ERC to implement an “administered price” during the period of a market operation.

However, a dispatch interval between the administered price and a secondary price cap will be “subject to price mitigation.”

While the administered price has yet to be determined, the secondary price cap currently stands at P6.245 per kilowatt-hour (kWh).

The lower amount between the two prices will be applied in the settlement of transactions.

The suspension of WESM will be lifted once the regional available capacity, less the actual regional demand, reaches above zero for 24 consecutive hours.

ERC also urged distribution utilities to avoid exposure from the spot market by inking contracts with generation suppliers.

ERC chairperson and CEO Monalisa Dimalanta said sourcing power from the WESM would result in a higher electricity rate “than what (consumers) normally experience.”

According to Dimalanta, they have already met with distribution utilities and told them to prepare for the summer months through negotiating supplies from generation suppliers.