Visayas power rates up as supply constraints hike generation costs

Electricity rates in Iloilo City increased in June after higher generation costs and supply shortages in the Visayas grid drove up prices in the Wholesale Electricity Spot Market (WESM), according to MORE Electric and Power Corp. (MORE Power).

Residential rates rose to P13.91 per kilowatt-hour (kWh) from P11.87/kWh in the previous billing period, while commercial rates increased to P13.04/kWh from P11/kWh.

“Per WESM, the increase in the price of electricity is about P2.04/kWh because the price is getting more expensive here in the electricity spot market,” the company said, 

According to MORE Power, WESM prices surged to P10.30/kWh from P4.45/kWh, more than double during the period. The generation rate, which reflects the cost of power purchased from suppliers and generating plants, also climbed significantly to P7.735/kWh from P2.10/kWh.

Tighter power supply

The utility linked the higher costs to tighter power supply conditions in the Visayas, where multiple generating units were offline, prompting repeated grid alerts.

“It is known that due to the supply period, Visayas is under 3 days Red Alert and 12 days Yellow Alert Status and continues to continue the following days,” MORE Power said. 

The outages removed a combined 488 megawatts (MW) from the grid, reducing available supply at a time of elevated electricity demand, particularly during the summer months. 

MORE Power also pointed to transmission limitations, including constraints in the Luzon-Visayas interconnection and the Leyte-Cebu submarine cable, which limited the movement of additional power into the Visayas.

Despite higher spot market prices, the utility said most of its power requirements continue to be sourced through bilateral supply agreements.

Struggling with more expensive supply

“MORE Power is struggling with more expensive supply from bilateral suppliers in the region compared to WESM. Sixty-two percent of electricity is sold in bilateral contracts while 38 percent of sales in WESM,” said the company.

To cushion the impact on customers, MORE Power said it would implement a staggered payment scheme for affected consumers.

The company also emphasized that it has not increased its distribution charge since taking over the city’s power distribution operations three years ago.

MORE Power said it continues to monitor market conditions and electricity prices amid ongoing Yellow Alert declarations by the National Grid Corporation of the Philippines, while assuring Iloilo consumers of stable and reliable power service despite supply challenges in the wider grid.