Meralco bills to go up in June
MANILA, Philippines—Customers of the Manila Electric Co., or Meralco, the country’s biggest power distributor, must brace for a “significant” increase in their electricity bills this month due to a spike in the cost of power taken from the wholesale electricity spot market (WESM).
“The expectation is that the generation charge will go up significantly, mainly because market prices in May were more than double their April levels,” said an industry source highly privy to Meralco and WESM data.
According to the source, the rise in WESM prices may be attributed to factors including supply problems and increase in peak demand.
“(The month of) May saw a confluence of events in the supply-demand situation that led to a spike in WESM prices. Demand surged with the effect of summer, while supply was limited due to reduced hydro availability and problems with large coal-fired plants,” the source explained.
The source noted that the Luzon grid experienced power-supply problems in May due largely to lower output of hydropower facilities given low water levels.
Also, the major coal-fired power plants—the 1,200-megawatt Sual coal-fired power plant in Pangasinan and the 700-MW Pagbilao coal facility in Quezon—experienced “extended breakdowns.”
One unit of the Pagbilao plant went offline starting May 19 and is not expected to be back until June 10, while the Sual power facility experienced what was termed as “governor valve” problems as well as a boiler tube leak from April 27 to May 10.
As a result of these supply issues, system operator National Grid Corp. of the Philippines (NGCP) had to designate the more expensive 630-MW Malaya thermal power plant in Rizal and the 620-MW Limay combined cycle facility as must-run units, to address both the low system voltage and inadequate reserve levels.
When a unit is designated as a must-run facility, the owner of the plant can ask for higher rates or for a premium for being required to run their facilities at a longer period than usual. This will thus add to the cost of power generated from that particular facility.
Meanwhile, peak demand in Luzon rose significantly in May to 7,900 MW from only 7,500 MW last March. This, according to the source, was the same surge in demand noticed by the NGCP, which led to the low voltage levels experienced by the Luzon grid.
May, the source further said, was typically the month of highest power demand, due to the cooling and water requirements during the summer season.
Meralco is expected to announce the adjustment for the generation charge anytime this week.
The generation charge, which is the electricity bill’s biggest component, usually averages about 60 percent of the customer’s average monthly power bill and goes directly to Meralco’s power suppliers. This charge is entirely a pass-through charge and did not accrue or go to Meralco. The cost of electricity sold by the generating companies could move from month to month based on many factors beyond its control, among them fuel prices, the dispatch of the IPPs, the foreign exchange rate and WESM prices.
