Power utility giant Manila Electric Company (Meralco) said it will be monitoring the probable impact of higher power rates that will result from the scheduled maintenance at the Malampaya gas platform this month.
The gas production facility, as advised to the Department of Energy (DOE), will carry out its maintenance activity from November 14 to 27; and any effect this will have on the rates will be reflected in the December bills of consumers.
Meralco Vice President Lawrence S. Fernandez indicated that “certain power plants that get fuel from the Malampaya gas platform are delivering power and that might affect the adequacy of capacity in the grid, which may push up spot market prices.”
But the offsetting twist to that, he said, is if there would be weather disturbance that could trigger substantial reduction in demand. When that happens, feared spikes in prices at the Wholesale Electricity Spot Market (WESM) may be cushioned.
As explained by Fernandez, typically when there is a shutdown or maintenance activity at Malampaya, its gas output may be restricted, so some power plants may be rendered unavailable for dispatch into the system. As a result of that supply crunch, prices in the spot market will often incur upticks.
Meralco said it sources 50-percent of its supply from gas-fired power plants feeding on fuel from Malampaya, hence, it is paramount for the utility firm to assess and monitor the maintenance activity’s effect because this will reflect in December bills, which may cause an uproar on consumers if there will be increase in their electric bills.
Fernandez noted that the gas plants may also need to shift to liquid fuels, like diesel or condensate, so that will be another sphere that the utility firm will need to keep a close watch on – especially on how oil prices will move in the international market in the coming days.
The Meralco executive added “the effect of reduced or stoppage of supply from the Malampaya gas platform may also affect the capacity of plants to supply power.”
In previous maintenance shutdowns of the Malampaya production facility, these generally triggered upward adjustments in electric bills of consumers because of supply tightness that ensued, especially during the 2013 shutdown that was aggravated by forced outages of many power plants.
On that so-called ‘perfect storm tragedy’ of the power sector then, electricity rates had gone up by as much as P4.50 to P5.00 per kilowatt hour (kWh), thus, court cases were lodged against the power generation companies so pass-on of the higher rates to the consumers could be prevented.
That also precipitated the allegations of collusion against the power generation companies because of the simultaneous shutdowns of power plants, which had been ill-timed because Malampaya was at its scheduled downtime also in that year.