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P0.79/kWh rate hike seen with Malampaya shutdown

January 25 ------ The roughly 7.5 million customers being served by power utility giant Manila Electric Company (Meralco) will have to brace for P0.7897 per kilowatt hour (kWh) hike in electricity rates as a result of the two-week scheduled shutdown of the Malampaya gas production platform next month.

The increase in electricity bills is based on the “cost impact” that Meralco had submitted to the Senate and presented to the January 13, 2023 inter-agency preparatory meeting convened by the Department of Energy (DOE) relating to the maintenance downtime of the Malampaya facility by February 4-18 this year. As explained by Meralco, the rate spike will be precipitated mainly by the shift of usage of the gas plants to imported liquid fuels that are relatively more expensive.

Based on the utility firm’s estimates, the fuel shift of its contracted Santa Rita gas plant will raise its charges to P9.4314 per kWh compared to P4.3005 per kWh if it will be drawing gas from Malampaya. Additionally, the charges of the San Lorenzo gas plant will climb to P9.3971 per kWh versus leaner level of P4.2575 per kWh if its source of fuel for electricity generation will be Malampaya gas. Meralco further indicated that the projected dispatch of the gas plants during the 15-day slated downtime of the Malampaya production facility will be 314.62 megawatts for the Santa Rita electric generating asset; and 141.88MW for the San Lorenzo plant. The anticipated upward adjustment in the electricity tariffs triggered by the Malampaya shutdown will be reflected in the March billing cycle of Meralco customers.

In previous Malampaya maintenance shutdowns, Meralco opted to pass-on the cost impact on staggered billing process – often for a spread of three billing cycles with approval from the Energy Regulatory Commission (ERC) – that way, it won’t result in bill shock to the ratepayers. Apart from the Malampaya-induced surge in electric bills, consumers are also expected to agonize over more factors that will drive up power rates starting next month — especially if Meralco’s supply procurement predicament can’t be resolved immediately following the expiration of its emergency power supply agreement (EPSA) with the Aboitiz group this January 25.

To plug the gap on its supply portfolio voided by supply cessation from the Ilijan gas plant of San Miguel’s South Premiere Power Corporation (SPPC), Meralco has been sourcing heftier capacity from the Wholesale Electricity Spot Market. The next episode of power industry turmoil that will distress consumers with double whammy of rate hikes and strained supply will be the summer months.


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