Meralco warns power rates will increase again in July

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Meralco warns power rates will increase again in July

By Alena Mae S. Flores | Posted on July 05, 2012 | 12:10am

Consumers may have to brace for another round of electricity rate hike in July, as distributor Manila Electric Co. expects generation charges to go up following the tight supply in June.

“The direction is towards higher generation charges,” a source said.

There is normally a one-month lag time before the power generation cost is passed on to consumers by power distributors such as Meralco.

Meralco’s generation charge reached P6.1375 per kilowatt-hour in June, up by P0.54 per kWh from P5.5983 per kWh in May, owing to higher prices at the wholesale electricity spot market, which acts as trading floor of electricity.

The source said the generation charge was influenced by the tight power supply experienced in June, when cheaper coal plants were shut down for maintenance. Several units of the Sual and Calaca coal plants were offline in the first week of June.

The Malampaya gas pipeline also went offline on June 8 to 12, which affected the operations of 1,500-megawatt Sta. Rita and San Lorenzo power plants of First Gas Power Corp.

The two power plants had to use the more expensive liquid fuel, during the Malampaya gas pipeline shutdown.

“We experienced tight generation supply in June. This pushed up WESM prices,” the source said.

The source explained the spot market had no choice but to tap the more expensive oil-based plants, as ‘must-run’ units due to the unavailability of the coal and natural gas plants.

Electricity prices in the spot market had already doubled to P16.30 per kWh in May from P7.91 per kWh in April because of high demand during the summer season and the low output of coal-fired and hydroelectric power plants.

Electricity traded by WESM accounted for only 5.5 percent of Meralco’s power requirements in May but the distributor said the steep P8.39 per kWh increase in spot market charges caused a rise in the overall generation charge.

Meralco sources most of its power from its independent power producers as well as the power plants managed by state-owned National Power Corp.

The overall rate charged by Meralco IPPs also increased by P0.0139 per kWh in May from the previous month.