Meralco pushes for sustainable power but warns of higher rates

Manila Electric Co., the biggest retailer of electricity, is pushing for a stronger sustainability agenda by continuing to tap energy produced by coal projects to serve its baseload power requirements and shield consumers from higher electricity prices.

“I think at the end of the day... there must be a commercial basis as to the choice between coal and gas for example or even renewables. At the same time we are mindful of the power rates that we will charge to the consumers,” Meralco chairman Manuel Pangilinan said.

“It’s alright to talk about renewables and gas but if it translates into higher prices, that obviously will be met with some resistance particularly politically,” he said.

Pangilinan said wind, solar and other types of renewables do not provide the kind of baseload capacity that the grid requires. “I don’t think it’s a clear-cut case for renewables,” he said.

Pangilinan also said decarbonizing the system would need the participation of rest of the power industry and the government because that transition could be expensive to consumers.

“Government’s got to participate in that transition as well. Who will bear the cost of this transition? Because it’s really for people in developed economies to talk about that because they got the resources to transition away from coal, but not for a developing economy like the Philippines,” he said.

“Unless somebody will tell our people that you gotta bear the cost now as we pivot to renewables, away from all thermal fuel that’s coal and gas. That’s gonna be painful if done in a short timeframe,” he said.

Meralco president Ray Espinosa said Meralco was pushing its sustainability agenda in terms of power generation sourcing and investment.

He said Meralco made a decision to source its mid-merit requirements purely from renewables.

“That mid-merit requirement of Meralco represents roughly 29 percent of our contracted capacity. So that is a huge undertaking and commitment already being made,” Espinosa said.

“The point of the chairman actually was more of towards the baseload capacity which is very sensitive to low-cost pricing, so that requires further thinking and further work. However we have also made a commitment to invest in, to develop and invest in at least 1,500 megawatts of renewable energy projects, power projects in the next five to seven years,” he said.

Espinosa said there was a need to address the baseload capacity of Meralco’s franchise area. “There is obviously a movement away from coal and as evidenced by the recent ban by the DOE on new coal capacity, so everyone will be looking now at gas as the transition fuel prior to full or deep decarbonization come 2050. So that’s the situation of the Philippines and DUs like us,” Espinosa said.

Meanwhile, Meralco reported that its average power retail rates in the first half dropped by 3 percent on account of lower charges in generation, transmission, and system loss.

Meralco first vice president and regulatory management head Jose Ronald Valles said retail rates decreased to P7.92 per kilowatt-hour in the first six months from P8.19/kWh registered in the same period last year.

The company said the lower generation charge, which represented 57 percent of the total retail price, accounted mostly for the drop.

Generation charges slipped by 1.33 percent to P4.50 per kWh due to the decrease in charges from the Wholesale Electricity Spot Market, the trading floor of electricity, coupled with lower fuel prices and the peso appreciation.

Topics: coal projects , Meralco , Manuel Pangilinan , Ray Espinosa
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