DOE’s new policy to protect consumers from price shocks during Malampaya maintenance

DOE’s new policy to protect consumers from price shocks during Malampaya maintenance

The Department of Energy (DOE) has set a new policy aiming to protect consumers from the impact of maintenance shutdowns, which are scheduled and are not meant to create price shocks.

In a briefing, DOE Undersecretary Felix William Fuentebella said DOE wants to prevent consumers from shouldering higher fuel costs when the Malampaya gas facility schedules its maintenance in the future.

The agency said they will look into the contracts of Malampaya gas facilities, power plants, and distribution utilities.

“We will look into these contracts and we will coordinate and we will ask their inputs on how to address the policy of Secretary [Alfonso] Cusi because scheduled maintenance is scheduled, meaning, it is foreseeable. so there should be no price shock,” Fuentebella said in a briefing.

“We’re willing to explore opportunities to work with the DOE and power users. Our interest is how we deliver gas safely, reliably and efficiently,” Shell Philippines Exploration Corporation (SPEx) managing director Don Paulino said in the same briefing.

On the other hand, Manila Electric Co. (Meralco) said any agreement should work with the contracts signed by parties involved.

“This involves several agreements from the consortium to the power plants. We have to look at all those arrangements. And whatever we agree upon, it should pass the legal test,” Meralco senior vice president and head of utility economics Larry Fernandez said.

During the 20-day Malampaya maintenance shutdown from Jan. 28 to Feb. 16, power rates were expected to increase since natural gas plants used other fuel sources like diesel, which are more expensive.

Meralco filed an application with the Energy Regulatory Commission (ERC) on January 31 for a total rate hike of P0.9174 per kilowatt-hour from March to May for the staggered recovery and payment of the generation charge.

Instead, the ERC provided a lower rate hike at P0.2211 per kWh spread from March to May.

*Photo from Pixabay

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  1. Elmer B. Sambo

    Noting will come out with the these discussions between DOE, Meralco and SPEx. Another scheduled Malampaya shutdown will come and as usual the consumers will be at the receiving end of this deal. The only way for this issue to be addressed is for DOE to come out with a concrete plan. An example is to put up a LNG regasification terminal at Batangas so as to back-up any Malampaya shutdown and in the long term the Malampaya field decline. Another option is to run a pipeline from Pagbilao to Batangas for the Pagbilao LNG hub to back-up Malampaya. With the signing and eventual ratification of the Paris Climate Change Agreement (COP21) the direction is to reduce greenhouse gas (GHG) emission by 70% by 2030. The only way to have a meaningful GHG emission reduction is to go for LNG and renewables. DOE can set this direction now as this will address the Malampaya shutdown issue, future decline of Malampaya field and at the same time bring our power system direction inline with GHG target.

  2. Diego Salvador

    This people just want to create a scenario so they can manipulate the price of electricity in the guise of Malampaya Shutdown. Actually that is just simple there are lots of idle LNG tankers just floating for any business opportunity with low cost they can rent 2 of this serve as storage tank.Rental of this tankers will not cost the consumers 5 centavos per kilowatt for the whole maintenance shutdown of Malampaya.

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