A 20-day maintenance shutdown of the Malampaya natural gas project early next year may increase the power rates in the franchise area of retailer Manila Electric Co. in March, the Energy Department said Thursday.
The Energy Department said in a statement based on a simulation by Meralco, power rates could increase by P1 per kilowatt-hour in March.
Energy Secretary Alfonso Cusi said the department started preparatory activities jointly with industry stakeholders to safeguard energy consumers from the possible impact on supply and prices of electricity during the scheduled maintenance activities from Jan. 28 to Feb. 16.
“My directive was clear. The Malampaya maintenance activities should pose no substantial impact to supply of electricity by using all available resources and remedies, because power is a basic necessity for our countrymen,” Cusi said.
He said plans and alternative modes should be in place and ready before the actual shutdown.
“We have to ensure that the program works for Malampaya are within the prescribed schedule given to the DOE. Historically, Spex [Malampaya operator Shell Philippines Exploration Corp.] completed its maintenance period on time. It is expected that it will do the same this time,” he said.
Spex apprised the department of the preparatory works for the Malampaya services maintenance shutdown. It said the maintenance activities would cover the repair of the sub-sea facilities, upgrades on the platform and maintenance on the onshore plant.
The department asked the National Grid Corp. of the Philippines to simulate the possible power supply scenarios and the Philippine Electricity Market Corp. to conduct a simulation on the wholesale electricity spot market prices during the Malampaya shutdown.
“The simulations will be submitted to the DOE for review and evaluation, so that we will be able to accurately respond to any unwarranted power market behavior,” Cusi said.
Meralco said its price simulation would factor in possible WESM prices due to plant outages during the Malampaya shutdown and generation cost of natural gas plants due to change in liquid fuel (diesel and condensate) which is more expensive than Malampaya’s natural gas.
“There will be an increase, but what we will do is to minimize the increase to soften the burden to our consuming public,” Cusi said.
The department called for another round of consultations and coordination before the holiday break.
“We assure the public that we will continue coordinate all the activities of those affected by the Malampaya SMS to avert any situation leading to the worst case scenario and to maximize the protection for the energy consuming public,” Cusi said.