IN METRO MANILA, NEARBY AREAS
Power cost going down; water rates up
By Abigail L. Ho, Amy R. Remo
Philippine Daily Inquirer
First Posted 02:49:00 12/05/2008
Filed Under: Electricity Production & Distribution, Water Supply, Consumer Issues
MANILA, Philippines—Power rates in Metro Manila and nearby provinces will go down this month, but water rates in a large swath of the metropolis may go up starting January.
Customers of the Lopez-led Manila Electric Co. will enjoy an early Christmas treat as the distribution utility’s rates go down by about 45 centavos per kilowatt-hour (kWh) this month.
This means that consumers using 200 kWh of electricity a month would see their December bills go down by P90.
Meralco said the reduction in its generation charge was due to the lower cost of gas that its two power plants were using.
Part of the savings of households from lower power rates may just be eaten up by a rise in water rates next month.
At a public consultation Thursday on rate rebasing, Maynilad Water Services Inc., the concessionaire in the west zone, said it was planning to increase the average all-in rate by P10.96 per cubic meter.
Maynilad said the adjustment was necessary for its new capital expenditures.
4 customer types
Average all-in tariff refers to the mean of all the rates plus add-on costs related to Maynilad’s four customer types—residential, semi-business, commercial and industrial.
This tariff is usually adjusted every five years by the Metropolitan Waterworks and Sewerage System and the water concessionaires through a process called rate rebasing.
In rate rebasing, water concessionaires are asked to update the service improvement plan for customers and evaluate the required capital investment in the near future.
If approved, households in the west zone using 10 cubic meters monthly will have to pay an additional P36.47 for a monthly bill of P133.51. This translates to an increase of P1.22 a day.
Households using 30 cu. m. monthly will have to shell out an additional P212.96, equivalent to P7.10 a day, for a monthly bill of P724.60.
The west zone concession area covers a total of 540.43 square kilometers consisting of 11 cities in Metro Manila and one city and five towns in Cavite province.
These are the cities of Pasay, Caloocan, Las Piñas, Parañaque, Valenzuela, Muntinlupa, Manila except portions of San Andres and Sta. Ana, some parts of Makati and Quezon City, Malabon and Navotas—all in Metro Manila; and Cavite City and the towns of Rosario, Imus, Noveleta, Bacoor and Kawit in Cavite province.
The east zone concessionaire is Manila Water.
Banked gas
At a briefing Thursday, Ivanna de la Peña, Meralco vice president and utility economics chief, said the reduction in the generation charge component of the company’s rates this month was due to the use of “banked gas” by the 1,000-megawatt (MW) Sta. Rita and 500-MW San Lorenzo gas-fired power plants.
Of the natural gas used in November, banked gas accounted for 50 percent of Sta. Rita’s consumption and 60 percent of San Lorenzo’s, De la Peña said.
“Natural gas that was contracted but not consumed for a certain year is ‘banked’ for future use. Every year, after the contracted quantities are consumed, the natural gas plants start to utilize banked gas,” she said.
De la Peña said the “cost of banked gas is more than 50 percent lower than the cost of the high-priced natural gas that was responsible for the increase in the generation charge for November 2008.”
This banked gas comprised natural gas that was not consumed in 2002 to 2003 and was priced much lower. Natural gas prices were benchmarked against oil prices and moved with the preceding six months’ average basket of fuel prices as specified in the contract with the gas sellers—in this case the Malampaya consortium.
Generation charge
Meralco’s generation charge in November went up by 30 centavos per kWh as the cost of natural gas for October was set using average prices from April to September, which included peak levels in May to July.
De la Peña earlier said that the cost of natural gas alone made up as much as 75 percent of what Meralco paid to independent power producer (IPP) First Gas Power Corp., which operated the Sta. Rita and San Lorenzo plants. First Gas Power Corp. is also owned by the Lopez family.
“In December, the two plants will continue to use banked gas, so we expect this (downward price) trend to continue up to January. Last month’s increase in generation charge was only temporary,” she said.
The use of banked gas by the Sta. Rita and San Lorenzo plants reduced Meralco’s overall IPP rate by more than P1.02 per kWh. The cost of power from National Power Corp., on the other hand, went down by 17 centavos per kWh.
However, the price of power purchased from the wholesale electricity spot market jumped P2.08 per kWh in the November billing month.
De la Peña said this did not have much of an impact on Meralco’s overall generation charge as the distribution utility got only 9.7 percent of its November supply requirements from the electricity bourse.
The bulk of the power firm’s supply requirements, or 51.6 percent, came from its IPPs. Napocor accounted for the remaining 38.6 percent of Meralco’s electricity supply in November, she said.
Maynilad president Rogelio Singson said the rate increase, to be implemented over the next five years, would be used to help fund capital spending.
Next year, Maynilad has earmarked P7.69 billion for capital expenditures to meet its “continuing goal of improving water pressure and availability in the west zone,” Singson said.
This allocation is, however, lower than what Maynilad initially earmarked for next year. Earlier, Maynilad said it would set aside P9.8 billion for capital expenditures for 2009; P8.7 billion for 2010; P8.6 billion for 2011; and P8.6 billion for 2012.
Water lost to leaks
Among Maynilad’s capital expenditures next year are programs for the management of non-revenue water (NRW) or water lost due to leaks and illegal connections; upgrading of facilities and replacement of primary lines; implementation of wastewater treatment projects; and development of new water sources.
Without citing specific figures, Singson said the bulk of Maynilad’s capital spending next year would go to the NRW Management and 3R (recover, reallocate, resell) program.
He said this program would involve major pipeline replacements to facilitate the recovery of NRW for possible delivery to areas with low supply. The program also includes the upgrading of pumping stations and reservoirs to increase water pressure along the trunkline and allow better control of supply through timely storage and release of water.
Muntinlupa treatment plant
To further boost water supply in the southern part of the concession, Maynilad is eyeing the development of the Muntinlupa water treatment plant to produce 100 million liters a day. The plant will get its supply from the Laguna Lake for distribution to underserved areas.
With the massive projects, Maynilad said it would be able to provide 98-percent coverage of the west zone with 24-hour water service at seven psi—the average water pressure at pounds per square inch—by the end of 2012.
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