Electricity bills expected to increase in November–Meralco

MANILA, Philippines—Manila Electric Co. (Meralco) customers should brace for another increase in their electricity bills this month due to a week-long shutdown of the Malampaya natural gas facility.

Informed sources told the INQUIRER that the shutdown of the Malampaya pipeline from October 20 to 26 would force power generation companies using Malampaya gas to use more expensive fuel. This is expected to result in the increase in their generation costs, which would be passed on to consumers.

Meralco sources its electricity requirements from three independent power producers (IPPs)—Quezon Power Philippines Ltd.’s coal-fired facility, the 1,000-megawatt Sta. Rita and the 500-MW San Lorenzo natural gas-fired power plants, which are both owned by the Lopez-led First Gas Holdings; the wholesale electricity spot market (WESM), and state-owned National Power Corp.

Sources said the week-long Malampaya pipeline shutdown had prompted First Gas to use the more expensive condensate fuel, in place of natural gas, to keep its Sta. Rita and San Lorenzo gas-fed facilities operational. This meant that the cost of producing electricity last month was much higher than that in the previous months.

First Gas is forced to use more expensive fuel to ensure the continued operation of its facilities and help avert possible power outages in Luzon, sources said.

The Malampaya shutdown also affected another gas-fed plant, the 1,200-MW Ilijan power plant, which was not able to operate during the said period.

To avoid rotating brownouts in Luzon, the more expensive oil-based power plants, such as the 640-MW Malaya and 620-MW Limay diesel facilities, were used to provide additional capacities.

The reduction in generation capacity in Luzon also led to a surge in WESM prices toward the end of October, hitting as high as P30 per kilowatt-hour during peak periods, from the normal P3-P4 per kWh, the sources added.

It can be recalled that the shutdown of Malampaya facilities in September contributed to the 14.19- centavo per kWh increase in the generation charge in the October power bill.

Sources pointed out that the shutdown in September was partial and effected for a shorter period of four days (Sept. 22-25), hinting that the increase in the November bills might be much higher than that a month ago.

The final generation charge is expected to be released by Meralco within this week.

Meralco has since stressed that the generation charge was a pass-through charge and would not go to Meralco. The cost of electricity sold by the generating companies could move from month to month based on factors beyond its control, such as fuel prices, the dispatch of the IPPs, foreign exchange rate and WESM prices.

The generation charge, which is the electricity bill’s biggest component, accounts for about 60 percent of the customer’s average monthly power bill. This goes directly to Meralco’s power suppliers.