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Energy department maintains power outlook but Meralco flags ‘upward’ rate pressure

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The Manila Electric Co. expects power rates to rise as demand spikes in the dry months.

By Victor V. Saulon
Sub-Editor

THE DEPARTMENT of Energy (DoE) has kept its power demand forecast for the dry season despite four straight days of “yellow” alert notices this week, saying the thinning power reserves did not change its expectations in the coming months.

However, distribution utility Manila Electric Co. (Meralco) expects an “upward pressure” in the price of electricity per kilowatt-hour in the monthly bill of consumers for March and April.

Sapat ang supply ng kuryente for our summer outlook (Electricity supply is sufficient for our summer outlook),” said Energy Undersecretary William Felix B. Fuentebella in a press conference at the department’s head office in Taguig City on Thursday.

“I don’t think it will change a lot [from our] present outlook. What we are proposing is a weekly update on how we can adjust our actions to address the situation,” he added, describing the yellow alert notices as “isolated” cases.

A month ago, the DoE said it expected Luzon to reach a peak demand of 11,403 megawatts (MW) in May. The March-June period, when the country will experience a “weak” El Niño, is expected to see a 30% reduction in hydropower capacity to 983-1,776 MW.




In the Visayas, power demand is expected to peak towards the end of the year at 2,299 MW, hence, the weather aberration should have minimal impact. Hydropower’s share in the area’s capacity mix is minimal at about 0.6%.

In Mindanao, peak demand is also towards yearend at 2,130 MW. Despite the possible significant effect of El Niño due to the 27.5% share of hydro in its capacity mix, the grid will remain stable due to the operation of large coal-fired power plants.

Lawrence S. Fernandez, Meralco vice-president and head of utility economics, said he expects the power generation charge for March to increase because of the three days of yellow alert notices during the month. Yellow alert notices are issued by system operator National Grid Corporation of the Philippines when reserve power thins as a result of the unscheduled outages of power plants.

This prompts Meralco to turn to the wholesale electricity spot market, where electricity prices are higher, to cover the deficiency.

Every time there is a reduction in reserves there is also pressure on the electricity prices at the spot market, said Andrea May T. Caguete, assistant manager for market information modelling at the Independent Electricity Market Operator of the Philippines.

NGCP is required to maintain a regulating reserve, which is ideally equivalent to four percent of the demand for the hour. The buffer covers small variations during normal operations.

A second layer or contingency reserve requirement is also allocated to immediately answer any reduction in supply when the largest power generating unit online — the 647 MW coal-fired power plant in Sual, Pangasinan — fails to deliver.

A dispatchable reserve — equivalent to the capacity of the second biggest operating plant, the second 647-MW unit of the Sual plant — is also readily available to replenish lost contingency reserve.

NGCP issues a “yellow alert” notice when the total of all reserves is less than the capacity of the largest plant online, which for the Luzon grid, is 647 MW. It issues a “red alert” notice when the contingency reserve is zero or a generation deficiency exists.

Meralco said its invokes its interruptible load program (ILP) when a red alert notice is issued. The scheme requires those in the program to voluntarily stop sourcing power temporarily from the utility and activate their own power generation sets.

The company said a total of 156 companies with a de-loading capacity of 546 MW have enlisted in ILP as of April 1.

A red alert notice has not yet been issued so far this year.