Failed power biddings could lead to higher electricity rates
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The Manila Electric Co. (Meralco) is left with no choice but to source as much as 260 megawatts (MW) of power supply from the Wholesale Electricity Spot Market (WESM), which could trigger a rate spike, due to failed biddings.
Meralco First Vice President and Regulatory Management Head Jose Ronald Valles said at a media briefing on Monday that Meralco’s present and “only available option for the 260 MW peaking power requirement is the WESM.”
A 260 MW peaking requirement, scheduled to be contracted by July, is needed to complement the 1,000 MW and 400 MW worth of power supply agreements (PSA) to ensure that the spiking demand will be covered.
Meralco intended to enter into a bilateral contract with San Roque Hydropower Inc., the sole bidder in the recent failed biddings.
However, the generator had to withdraw its offer due to the inability to generate a substantial portion of the targeted peaking contract capacity amid El Niño.
Aside from contracting supply from the WESM, Valles said Meraclo can also utilize the 400 MW PSA with Limay Power Inc. for P6.2708 per kilowatt-hour (kWh) inclusive of value-added tax and line rental.
However, it cannot be dispatched as it has yet to receive a provisional authority from the Energy Regulatory Commission, which Meralco hopes to receive soon.
Historically, WESM electricity prices surge due to unscheduled outages of power plants caused by the extreme temperatures prevalent during the summer months.
On Monday, Meralco Vice President and Head of Corporate Communications Joe R. Zaldarriaga also hinted that consumers may have to adjust their electricity expenses in the coming month as rates may shoot up due to pressure from high demand.
“Well, it's a measure of supply vis-a-vis the demand. As for us, we cover ourselves with our bilateral contracts. Aside from procuring from the spot market, we have our bilateral contracts that are more stable. But then again, there is that possibility of higher prices because the prices are high in the market where we take them,” Zaldarriaga explained.
“If we look at the historical data of price movements, usually summer months are the highest. The high demand adds pressure for prices to go up,” he added.
Electricity rate this month went down by 99 centavos per kilowatt-hour (kWh) to P10.95 per kWh from P11.94 per kWh in March due to the reduction in both generation and transmission charges.
The price adjustment was equivalent to a P198 reduction in the total electricity bill for every residential household consuming 200 kWh.
