Power retailer Manila Electric Co. (Meralco) warned of higher power rates for June due to higher spot market prices amid the spate of red and yellow alerts in April, increase in the settlement costs in the reserve market and higher feed-in tariff allowance, and the impact of the peso depreciation.
Meralco made the statement as the Luzon grid is once again placed in a yellow alert by the National Grid Corporation of the Philippines (NGCP) from 2pm to 4pm and 7pm to 10 pm due to insufficient generating capacity.
“This is expected to be driven by the settlement costs in the reserve market and increase in feed-in-tariff allowance (FIT-All) that will be reflected in the bills of customers this month,” Meralco vice president and spokesman Joe Zaldarriaga said.
The Energy Regulatory Commission (ERC) ordered the partial lifting of the suspension on settlement amounts in the reserve market.
NGCP can start recovering costs for trading transactions made in the reserve market in March due to the order and this could translate to an increase of more than P0.10 per kilowatt hour on the ancillary services component of the transmission charge in June.
The ERC also recently approved the implementation of the new FIT-All starting this month, which would result in an increase of P0.0474 per kwh.
Zaldarriaga said, on top of these charges, there’s also an upward pressure in the generation charge given the tight supply conditions in the Luzon grid.
“We’ve experienced a series of red and yellow alerts in the last supply month, and as we know, these conditions affect generation costs particularly that in the Wholesale Electricity Spot Market or WESM,” he said.
The WESM is the trading floor of electricity where prices are volatile as it is dictated by demand and supply.
The peso depreciation, which affects a big chunk of the costs of independent power producers and power supply agreements, is also expected to contribute to higher generation charge in June.
Meralco rates increased by P0.46 per kWh last month following a steep drop of almost P1 per kWh in April, largely due to the generation charge, which was then driven by higher costs from the WESM.
For her part, ERC chairperson Monalisa Dimalanta said the agency identified the distribution utilities/electric cooperatives (DU/ECs) that have very high WESM exposure (more than 40 percent) in the WESM.
She said they have started issuing provisional approvals to those with power supply agreements (PSAs) pending with the ERC.
“That will help address pricing issues so that the DU customers will not be exposed to high WESM prices. Our difficulty is with those DU/ECs with high WESM exposure that have not filed for approval of any PSAs with us. The customers in those areas are really left exposed until the DU/ECs start locking in prices by contracting supply,” Dimalanta said.
Meanwhile, NGCP said available capacity reached 14,080MW on Monday compared to peak demand of 12,951MW as two power plants have been on forced outage since 2023, two between January and March 2024, and 12 power plants between April and May 2024; while six are running on derated capacities, for a total of 2,692.8MW unavailable to the grid.
NGCP said factors that contributed to the raising of yellow alert include the deration of Masinloc 1 (from 344MW to 180MW), Masinloc 2 (from 344MW to 320MW), Calaca 2 (from 300MW to 220MW), and Ilijan A from (600MW to 500MW) 2. Unavailability of Angat Main (200MW) due to low water elevation 2. Forced outage of the following plants: QPPL (460MW), Pagbilao 2 (382MW), and Sual 1 (647MW).
A yellow alert is issued when the operating margin is insufficient to meet the transmission grid’s contingency requirement.
NGCP said the Visayas and Mindanao grids are under normal condition on Monday.
Editor’s Note: This is an updated article. Originally posted with the headline Consumers face fresh power burden as Meralco announces higher rates this June
