Power retailer Manila Electric Co. asked the approval of the Energy Regulatory Commission for a rate hike of P0.92 per kilowatt-hour that will be implemented in three months starting March.
Meralco senior vice president and head of customer retail services, corporate marketing and communications Al Panlilio said the application sought to mitigate the effect of an abrupt increase in generation cost as a result of tight power supply following the maintenance shutdown of Malampaya natural gas facility.
“Yes, we filed for staggered application. It’s P0.30, P0.30 then P0.32. [This is] to lessen the impact on consumers’ bills,” Panlilio said.
Meralco plans to implement the staggered payment, starting with P0.30 per kWh in March, followed by another P0.30 per kWh in April and the remaining P0.32 per kWh in May.
The power distributor said earlier customers should expect a “significant increase” in their bills because of higher fuel costs, foreign exchange adjustment, increase in transmission cost and other factors.
Meralco said in its application with ERC the Malampaya shutdown on Jan. 28 to Feb.16 forced the natural gas plants to use the more expensive liquid fuel.
The Malampaya gas field northwest off Palawan, operated by Shell Philippines Exploration B.V. and other consortium members Chevron Malampaya LLC and PNOC Exploration Corp., provides fuel to 3,000 megawatts of natural gas power plants in Batangas.
Meralco said the shutdown coincided with the maintenance repair of the power plants of Sem-Calaca Power Corp. unit 1 and Quezon Power Philippines plant which used to collectively contribute 565 MW to Meralco,
Meralco said it instituted measures to mitigate the impact of the shutdown on supply and power rates but the power distributor’s blended rates were still expected to rise.
“The incremental fuel costs due to the use of liquid fuel is expected to increase the overall rate of Meralco from March 2017 billing by about P0.9171 per kWh,” Meralco said.
Meralco said it could automatically reflect the full generation costs for the March billing to its customers but “it is cognizant of the financial burden such rate hike will place on its customers.”
“To mitigate the effect of the abrupt increase in generation costs due to the use of liquid fuel, especially considering that the WESM [Wholesale Electricity Spot Market] prices may also increase during the period, Meralco proposes that instead of reflecting the full incremental incremental fuel cost component of the total generation costs in the March 2017 generation charges, it be allowed to implement the increase in three billing months starting March until May 2017,” it said.
Meralco said this meant that the estimated incremental fuel cost of P2.4 billion incurred during shutdown, only a third or P791 million would be included in the March and April billing and the remainder in May.
Meralco, however, said the computation was without prejudice “to any adjustments that may be necessary as actually reflected for the power bills issued by the power suppliers for the February 2017 supply month.”
The company also asked ERC to defer the payment to its suppliers during the three-month recovery period. Meralco said “these proposals are without prejudice to any application that may be subsequently filed for the recovery of any appropriate carrying charge.”
Meralco said among the measures it instituted in coordination with the Energy Department and other stakeholders included coordination with First Gas Power Corp. to run San Lorenzo and Sta. Rita gas plants, respectively on liquid fuel.
Meralco also coordinated with South Premiere Power Corp. controlled by San Miguel Corp. for the use of diesel for the Ilijan unit 2 natural gas plant to make available 420 MW to consumers.
Meralco said it also made preparations to tap participants of the interruptible load program where large customers were asked to deload from the grid in case Luzon was placed on red alert.