The Market Monitor Minding the Nation's Business
The research group IBON warned the people that bigger power-rate increases loom during the dry season following the approval by the Energy Regulatory Commission of the staggered power-rate increase starting this month.
To cover fuel costs from the 20-day Malampaya gas-plant shutdown, the ERC approved an increase of 66.34 centavos/kWh power rate to be implemented incrementally from March to May. The approved rate increase was lower than the 91.74 centavos/kWh increase that Meralco originally applied for since the ERC used the previous month’s actual fuel costs in its calculations, instead of Meralco’s projected fuel costs.
IBON noted that the approved rate increase only factored in the effect of the Malampaya shutdown on power plants that it directly supplies.
The shutdown, however, will have an impact as well on price movements in the wholesale electricity spot market (WESM) and the other power suppliers of Meralco, and will result in higher generation costs passed onto consumers.
Power generators and suppliers have previously been accused of manipulation to artificially increase rates during major plant shutdowns, said the group.
In 2014, Meralco and its suppliers, like the Aboitiz-owned Therma Mobile, were accused of artificially inflating prices in the WESM even beyond the Malampaya shutdown from November to December 2013.
Meralco applied for an unprecedented P3.44/ kWh generation charge to cover the manipulated spot market prices, which led to a public outcry and an eventual Supreme Court temporary restraining order (TRO) to stop it.
In Luzon where Meralco operates, just three groups, San Miguel Corporation, the Lopez group, and the Aboitiz group, control 70 percent of power generation.
IBON said that such tremendous control makes alleged collusion and price rigging easier, like during power-plant shutdowns that lead to rate spikes.
IBON said Meralco’s rates also continue to be among the most exorbitant in the region.
The power distributor’s own commissioned survey in 2016 shows that its rates are the third highest in Asia. An average Meralco customer is also paying 4.5 percent of disposable income for electricity, higher than the global average of 3.9 percent.
In Meralco’s application filed last Jan. 31, 2017, the incremental liquid fuel cost was estimated at P2.417 billion, using certain assumptions, equivalent to around 92 centavos/ kwh.
Based on actual suppliers’ billings provided to ERC last March 3, the incremental cost was lower at P1.752 billion, or about 66 centavos/ kWh.
Overall generation charge this month increased by 58 centavos per kWh to P4.90 per kWh.
For a typical residential household, the overall rate will rise to P9.67/ kWh from last month’s rate of P9/ kWh which translates to a P132 increase in the total bill of a typical residential household consuming 200 kWh a month.
The rate increase this month is mostly due to the upward movement in the generation charge, caused mainly by the 20-day Malampaya maintenance shutdown that took place from last Jan. 28 to Feb. 16.
The shutdown affected the natural gas supply to the Ilijan, Sta. Rita and San Lorenzo plants that supply an aggregate capacity of 2,565 megawatt (MW) to Meralco’s franchise area.
With the shutdown, these plants had to switch from natural gas to more expensive liquid fuel so that they can continue supplying power to the grid.
The Malampaya shutdown also coincided with the scheduled maintenance of other power plants such as SEM-Calaca Power Corp. Unit 1, Quezon Power (Philippines), Ltd., and one block of the Ilijan power plant, which collectively contributes some 1,185 MW of Meralco’s power requirements.
Energy Secretary Alfonso Cusi said his department is working with power plant owners and Meralco to cushion the impact of the higher electricity prices.
“We are still keen on looking for ways (so as) not to pass on to the consumers the incremental cost brought by the shutdown. We are planning to hold a conference among those involved to address a no pass-on policy,” Cusi said. RIZA LOZADA