Philippines: DOE vows to minimize power rate hike next year

Philippines: DOE vows to minimize power rate hike next year

THE Department of Energy (DOE) has started preparatory activities jointly
with industry stakeholders to safeguard energy consumers from a possible
supply shortage and increase in the price of electricity due to a scheduled
shutdown of the Malampaya natural gas facility early next year.

The Malampaya facility is scheduled to undergo maintenance activities from
January 28 to February 16, 2017.

"My directive was clear-the Malampaya maintenance activities should pose no
substantial impact to supply of electricity by using all available resources
and remedies, because power is a basic necessity for our countrymen," Energy
Secretary Alfonso G. Cusi said on Thursday.

Distribution utility Manila Electric Co. (Meralco) projects an increase of
around P1 per kilowatt hour (kWh) on the generation cost rate during the
period of the shutdown, which its customers will see in their March 2017
billing.

Meralco's price simulation factored in possible WESM (Wholesale Electricity
Spot Market) prices due to plant outages during the shutdown and the
generation cost of natural gas plants due to the change in liquid fuel
(diesel and condensate), which is more expensive than Malampaya's natural
gas.

"There will be an increase, but what we will do is to minimize the increase
to soften the burden to our consuming public," energy chief said.

Cusi said plans and alternative modes should be in place and ready before
the actual shutdown.

In a meeting with industry participants last December 15, the DOE was
updated by Shell Philippines Exploration Corporation (SPEx), operator of the
facility, about the preparatory works for the Malampaya services maintenance
shutdown (Malampaya SMS).

According to SPEX, the maintenance activities will cover the repair of the
sub-sea facilities, upgrades on the platform, and maintenance on the onshore
plant.

"We have to ensure that the program works for Malampaya [are]within the
prescribed schedule given to the DOE. Historically, SPEX completed its
maintenance period on time. It is expected that it will do the same this
time," Cusi said.

To ensure power reserves during the summer period, the 600-megawatt (MW)
Ilijan Natural Gas Power Plant in Batangas will time its maintenance
shutdown with that of Malampaya to cost-efficiently use the Malampaya
downtime period.

On the power situation outlook, the National Grid Corporation of the
Philippines (NGCP) was tasked to simulate possible power supply scenarios,
while the Philippine Electricity Market Corp. (PEMC) will conduct a
simulation on the WESM prices during the Malampaya shutdown.

"The simulations will be submitted to the DOE for review and evaluation, so
that we will be able to accurately respond to any unwarranted power market
behavior," Cusi said.

The meeting convened by the DOE last 15 December was attended by the
concerned DOE bureaus, SPEX, NGCP, PEMC and Meralco.

The Energy department called for another round of consultations and
coordination last 22 December. In addition to the participants in the first
round of consultations, concerned generation companies, large Interruptible
Load Program participants, and representatives from the secretariat of the
Senate and House Committee on Energy were also invited.

"We assure the public that we will continue coordinate all the activities of
those affected by the Malampaya SMS to avert any situation leading to the
worst case scenario and to maximize the protection for the energy consuming
public," Cusi concluded.

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Link to Original Article:
http://www.manilatimes.net/doe-vows-minimize-power-rate-hike-next-yr/303463/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com