Power plant outages to push Meralco rates higher in February

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By Victor V. Saulon, Sub-editor

MANILA ELECTRIC Co. (Meralco) expects electricity rates to rise in February in part because of the power plant outages in the latter part of January, which resulted in an increase in the power prices at the spot market, an official of the company said.

“During the second half of January, there were many power plants on outage,” Lawrence S. Fernandez, Meralco vice-president and head of utility economics, told reporters after a Senate hearing on Monday.

“More than 3,300 megawatts of capacity went on outage, both forced outage and due to scheduled outages,” he added.

Mr. Fernandez said the power plant that went offline triggered a rise in the prices at the wholesale electricity spot market.

Tumaas ‘yung spot market prices during the second half of January. That might also affect the generation charge in February,” Mr. Fernandez said.

He also said that as in the past two to three years, the reduction in the generation charge in January prompted a “normalization” in February. He noted prices in January reflected the reduced capacity fees for the outage allowance reconciliation for the power supply agreements (PSA).

“If power plants do not use their outage allowance for the year, then by December they charge us lower or with no capacity fees. And that leads to the lower generation charge in January,” Mr. Fernandez said.

“Since we have a new calendar year starting January, then the capacity fees go back to normal. And that will be reflected in the January generation charge,” he added.

In January, Meralco announced a decrease in the overall electricity rates to P9.835 per kilowatt-hour (/kWh), down P0.3418 per kWh from the rate in the earlier month, mainly due to the lower cost of power from its PSA.

The generation charge for January went down to P4.9119 per kWh, a decrease of P0.4184 per kWh from P5.3303 per kWh in December.

The decrease is largely the result of a P1.2293-per-kWh reduction in the cost of power from Meralco’s PSAs, the share of which was at 40% of the utility’s requirement for January.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls.