Malampaya shutdown to hike Luzon rates

The scheduled shutdown of the Malampaya natural gas field in mid-July amid the tight power situation in Luzon may result in higher power rates for Luzon-based consumers come August, a Department of Energy (DoE) official said.

In comments released by DoE as an update on the power situation, Undersecretary Josefina Patricia Asirit said, “The [affected] billing period will come in the August bills of consumers. Actually, even with oil prices coming down, we have to remember that oil prices are based on a comparison with other technologies so it’s more expensive than coal, natural gas, geothermal, etc., in pricing. And it’s a pass-through account. There is already a methodology for that, that the ERC (Energy Regulatory Commission) allows for.”

The scheduled shutdown of the Malampaya pipeline from July 13 to 21 would force three power-generation plants using natural gas to use more expensive fuel, Asirit said. These are the natural gas power plants in Sta. Rita, San Lorenzo and Ilijan, all in Batangas province.

This situation is expected to result in higher generation costs, which would be passed on to consumers, she said.

Recently several power plants shut down, either due to emergencies or scheduled maintenance. However, the emergency shutdown of plants is not yet seen to affect pricing since reserves have not been tapped, Asirit said.

Asirit said it is more likely for power plants to seek alternatives next month when Malampaya shuts down. “That is nine days and that is when our three plants, accounting for 2,700 megawatts (MW) of power will be using alternative power, which is more expensive than natural gas which they are using right now,” Asirit said.

Users should, thus, monitor their consumption despite the improving power supply in Luzon, Asirit said.

“Normally we switch off our electricity at 12 noon. But we actually need to save up during the peak hours—around 10 a.m., that is the peak for energy use, say in offices, since everything is there like computers that are not used but are on stand-by. We can also adjust the air-con thermostat, [for example] to 22 instead of 18. Basically, be conscious that that is our peak [hour],” she said.

Asirit said the power supply situation is “alleviating a bit” and that some of the power plants that were off line before are now on line again, but not all may run at optimal capacities.