Plant outages, Malampaya gas restriction triggering power rate spikes

Published April 6, 2021, 11:45 AM

by Myrna M. Velasco

Despite stifled demand because of the re-imposition of enhanced community quarantine (ECQ) in the so-called NCR plus bubble, prices in the Wholesale Electricity Spot Market (WESM) have been hitting record-spikes in recent trading days because of the combined impact of simultaneous power plant outages and the gas restriction at the Malampaya field.

According to sources from the industry, outages in power plants last month caused more than 3,500 megawatts taken out from the system, hence, the well-anticipated rate hikes in the April billing cycle that will be dispatched to consumers this week.

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 – google)

Until this time, it was noted that the outages of power plants are still persistent, so there are already expectations that surge in power bills may also be experienced until next month.

Energy Secretary Alfonso G. Cusi also acknowledged that Luzon “experienced grid disturbance on Monday (April 5) with the outage of GNPower Dinginin Unit 1 and Pagbilao unit 1 plants.”

He emphasized that such incident in the system “resulted in automatic load dropping of some areas in Metro Manila and other areas in Luzon between 2:55pm and 3:12 pm on Monday.”

Energy Secretary Alfonso G. Cusi

In the service area of Manila Electric Company (Meralco), “around 440MW of Meralco load was automatically dropped due to the plant trippings,” according to company vice president Lawrence S. Fernandez.

The power plant outages, according to the Department of Energy, are combination of scheduled maintenance activities and forced downtimes; and these are consequently exerting pressure on available supply that could be readily called on for dispatch.

Starting on March 22, sources also indicated that Malampaya operator Shell Philippines Exploration B.V. (SPEX) advised on its ‘gas restriction’ dilemma; and that caused gas-fired plants to operate on de-rated capacity.

Based on data gathered from the system operator, it was emphasized that the plant outages “had been aggravated by gas supply restriction, and as a result, Ilijan capability was reduced from 1,200MW to 345MW.”

Fernandez said they will monitor developments in the market if these will continue in the coming days or weeks – including the rate spikes; and they will just reconcile these developments with any demand fluctuation arising from the ECQ enforcement of the government.

He stressed “we’ve already observed elevated WESM prices since March, as a result of increasing demand – with warmer weather – and significant capacity on outage.”

By far, he noted that spot market charges in March had already risen “to their highest levels in 10 months.” Fernandez said cost impact of that will manifest in April bills.

However, if the condition in the system will carry on, it was opined that even the May bills of consumers may still be soaring – which is not an encouraging development especially so since many Filipinos are out of work again because of the stricter quarantine measures being enforced because of the rising rate of Covid infections in the country.

Higher usage of electricity had also shifted to the residential segment because of the work-from-home arrangements and the online distance learning of students, therefore, higher power bills will be bad news given the shrinking budgets of many Filipino families.