Electricity rates to surge this summer

MANILA, Philippines - Electricity rates are sure to go up this summer on the back of the maintenance shutdown of the Malampaya Deep Water Gas-to-Power Project in offshore Palawan.

The month-long shutdown commenced last Sunday and would last until April 13. With this development, the three natural gas-fired power plants sourcing fuel from the Malampaya gas field would have to use the more expensive liquid fuel.

According to industry data, natural gas costs P5 per kilowatt-hour while diesel can cost P7 to P10 per kwh.

Larry Fernandez, senior vice president of power distributor Manila Electric Co. (Meralco), said the generation charge – the biggest component of the electricity bill, accounting for roughly 60 percent of total electricity cost – would go up by P0.46 per kwh in April and P0.72 per kwh in May.

Fernandez said the increase in the generation charge would be higher in May because there are more days in the April supply month affected by the shutdown.

He also said running the three plants in Batangas – the 1,200 megawatt Ilijan, the 1,000 MW Santa Rita and 500 MW San Lorenzo natural gas-fired power plants – is necessary.

“These power plants are needed by the system because they account for 40 percent of the supply of Meralco so we need them to run,” Fernandez said.

As of yesterday, the Luzon grid had reserves of 1,122 MW while the system’s capacity was estimated at 8,696 MW. Demand, meanwhile, was at 7,574 MW, according to the National Grid Corp. of the Philippines (NGCP), the grid operator.

The Department of Energy (DOE) is keeping a close watch on power plants as unscheduled power outages could result in rotating blackouts.

Whether or not power plants would go on unplanned outage in the coming days remains to be seen. The possibility of this happening, however, is higher this summer as more demand for power could push the aging plants to their limits.

In 2014 alone, the Luzon grid counted 83 forced outages caused by inadequate power plant capacity, insufficiency of required reserves, worsening weather disturbances and increased reliance on expensive oil-fired plants.

Energy Secretary Jericho Petilla said the department is also closely monitoring the Interruptible Load Program (ILP), which is seen to address the power shortage.

Under ILP, big power users would be asked to use their own generators to ease demand from the grid. The electricity that would not be taken from the grid would be distributed to residential consumers, sparing them from rotating blackouts.

So far, power distributor Meralco has drawn in 667 MW of ILP capacity.

But compensation for ILP users is still unclear as the House of Representatives and the Senate are on a deadlock over some provisions of a joint resolution that would give President Aquino special powers to tap additional capacity this summer, specifically through the ILP.