Categories: BusinessBusiness News

Maintenance of Malampaya to trigger power rate hikes

The forthcoming maintenance schedule of the Malampaya gas production facility next month is expected to trigger hikes in the electricity bills that will be dispatched to Filipino consumers around Christmas time.

The Malampaya gas field uses an innovative and sustainable deepwater technology for recovering natural gas from the deepwater reservoir in northwest Palawan. ( note: image from shell.com – google)

The Department of Energy (DOE) confirmed that the Malampaya gas facility will undertake maintenance activities for roughly two weeks on November 14-27; and this will result in reduction on its gas output.

As an upshot of that, the country’s gas-fired power plants will need to partly shift to liquid fuels, which will be a more expensive alternative, therefore, this will subsequently drive power rates higher.

Energy Secretary Alfonso G. Cusi explained that the scheduled repair at Malampaya “is a planned turnaround that has been coordinated with us (DOE), the Malampaya customers and the power network early 2020.”

He said “the timing was agreed based on the grid forecast at the time and the available supply.”

The energy chief assured “the planned turnaround should have minimal impact to power production,” or the electricity supply that shall be made available to the grid when the maintenance activities will be carried out.

Nevertheless, the main worry of power industry stakeholders is the resulting rate that the lower gas output of the field will spark off; to which in their assumption, will definitely precipitate spikes, primarily in settlement prices at the Wholesale Electricity Spot Market (WESM) as well as in the eventual charges of the gas-fed power generating facilities.

In the recent gas restriction experienced by Malampaya in August compounded by the outages of power plants, this set off upward adjustment in electricity rates in the October billing, hence, the Energy Regulatory Commission (ERC) has been cautioned to keep a close watch on the behavior of trading participants in the WESM.

Laban Konsyumer Inc. (LKI) President and former Trade Undersecretary Victorio Mario Dimagiba stated in his correspondence to the ERC that it is urging “the energy sector and the regulator to stay alert on WESM prices, as these acted as triggers for the higher power rates this month.”

The group is proposing “automatic internal review in PEMC (Philippine Electricity Market Corporation) of the WESM prices, to assess what triggered the cap,” which was breached twice at P32 per kilowatt hour last September 5 and 7.

In past instances of Malampaya downtime or maintenance schedules, these always resulted in increased electricity tariffs, the worst was in 2013 because it was aggravated by simultaneous shutdowns of power plants.

With forecasts of repeated cycle of upticks in WESM prices, the LKI calls on “stricter and closer watch on WESM and a monitoring of the spot market prices and activities.”

Dimagiba stressed “WESM must be checked, and the public as well as consumers, deserve to be assured that the market is working fairly, justly and correctly.”

He further opined “it is the ERC’s job to ensure that WESM is regulated properly and there are no abnormal activities that will disadvantage the customer.” (MMV)

Bernie Cahiles-Magkilat

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