Malampaya maintenance shutdown may push up December rates – MERALCO

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After announcing a rate cut for November, the Manila Electric Company (MERALCO) is watching for a possible hike in power rates in December due to the Malampaya gas platform’s maintenance shutdown from November 14 to 27.

MERALCO utility economics head Lawrence Fernandez noted that power plants sourcing fuel from Malampaya still need to produce electricity despite the lack of supply, which may push up prices in the Wholesale Electricity Spot Market (WESM).

There may be a twist to that, though, as weather disturbances could significantly reduce demand.

Lower power demand resulting from power outages due to Typhoons Quinta and Rolly was a factor in MERALCO’s lower charges for November. As of 8AM Thursday, Typhoon Ulysses has downed 38 transmission lines in 17 provinces across the Luzon Grid. Reduced power demand may cushion expected price spikes at the WESM.

MERALCO, the Philippines’ largest power distributor, sources half of its supply from gas-fired plants powered by Malampaya, the country’s only indigenous natural gas source.

Fernandez noted that the gas plants may likewise need to shift to liquid fuels, such as diesel or condensate. This will then make the utility giant watch for oil price movements in the world market in the coming days.

Previous scheduled maintenance shutdowns of Malampaya have prompted increases in electric bills due to lower supply. The worst of these was in 2013 when many power plants suddenly went offline at the same time, triggering a Php4.50-5 per kilowatt hour increase in electricity rates and later leading to court cases against power generation companies.

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