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Double whammy on consumers: Power rate, oil price hikes

Consumers are in for a double-whammy of higher power bills and oil prices this month.

The Manila Electric Co. said over the weekend that its generation charges are likely to go up in April amid tight supply and increased demand.

Oil prices, on the other hand, are forecast to increase due to expectations of a tight global supply, with diesel prices seen rising P0.10 to P0.15 per liter and gasoline going up P0.15 to P0.25 per liter starting Tuesday.

“There is pressure that generation charge for April will go up. There were three days of yellow alerts in the first week of March and then second, the peso was weaker in March versus February,” Lawrence Fernandez, Meralco head of utility economics said.

The grid operator places the Luzon grid on yellow alert when reserves fall below the single biggest unit in the grid. The tightness in supply due to the low reserves causes power rates in the electricity spot market to go up.

“For both factors, there is tendency that the generation charge will go up but we need to see what the billings from suppliers are,” Fernandez said.

Fernandez said that while there is pressure on the rates, there are cases when the power plants operate on a continuous basis and “sometimes they can offset the effect of forex depreciation.”

“It’s a mix of factors and we don’t know what will prevail. But so far right now, with the info we have, there is pressure for the gen charge to go up,” the official said.

Fernandez also said it is still too early to predict the price trend for May given that there have been five yellow alerts in the past week alone.

“Every time there is a reduction in the reserves, there is also pressure in the spot market prices. We’ve had five consecutive days of yellow alerts, with corresponding effects on spot market prices,” he said.

Meralco spokesman Joe Zaldarriaga said the company is ready to provide 24/7 services during the May elections.

“We have contingency measures as well. Just like in the 2016 national elections, we deployed several generation sets in strategic areas. In case there will be isolated outages, we will be able to provide what is needed in terms of supply through our mobile generator sets,” Zaldarriaga said.

Meralco can tap 156 participants of its interruptible load program to offload 564 MW of capacity from the grid and use their own generator sets if needed by the grid, he said.

Fernandez said the company is also exploring securing interim supply agreements for the dry months.

Meralco is the country’s biggest power distributor with over six-million customers in its franchise area.

READ: Oil price hike set this week

READ: Power price hike impends in aftermath of ‘yellow alerts’​

Topics: Manila Electric Co , Lawrence Fernandez , Joe Zaldarriaga , Diesel
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