Philippines: Power rates may spike in March

Philippines: Power rates may spike in March

THE MAINTENANCE shutdown of the Malampaya natural gas platform in northwest
Palawan early next year is likely to result in a P1-per-kilowatt-hour (kWh)
increase in electricity rates, the Energy department said on Thursday
quoting a simulation from the country's biggest distribution utility.

"There will be an increase, but what we will do is to minimize the increase
to soften the burden to our consuming public," said Energy Secretary Alfonso
G. Cusi in a statement.

The Malampaya offshore facility is scheduled to be shut down from Jan. 28 to
Feb. 16 next year.

The electricity price simulation submitted by Manila Electric Co. (Meralco)
to the Department of Energy (DoE) shows the power generation cost might
increase by around P1 for each kWh, which customers will see in their
monthly electricity bill by March 2017, the agency said.

Meralco's simulation factored in the possible wholesale electricity spot
market (WESM) prices because of plant outages during the period when
Malampaya is not in service. It also counted in the generation cost of
natural gas plants when they change to diesel and condensate liquid fuels,
which are more expensive than Malampaya's natural gas.

The Energy department said the 600-megawatt Ilijan natural gas power plant
in Batangas would schedule its maintenance outage during the Malampaya
downtime ahead of summer when power reserves fall as electricity demand
rises.

Mr. Cusi said he was assuring the public that industry stakeholders would
continue to coordinate their activities during the Malampaya shutdown "to
avert any situation leading to the worst case scenario and to maximize the
protection for the energy consuming public."

The DoE also said it was making sure that the Malampaya shutdown is kept
within schedule.

Mr. Cusi said his department had started "preparatory activities" with
industry stakeholders to guard energy consumers against any adverse impact
of the outage.

"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," he said.

He said "plans and alternative modes" should be in place and ready before
the maintenance activities.

On Dec. 15, Mr. Cusi met with representatives of the energy industry and was
apprised by Shell Philippines Exploration B.V. (SPEx) about the preparations
ahead of Malampaya's service maintenance shutdown. SPEx operates the
$2-billion Malampaya natural gas development project.

The maintenance activities will cover the repair of the sub-sea facilities,
an upgrade on the platform and maintenance on the onshore plant, the
department said referring to SPEx's advice.

"We have to ensure that the program works for Malampaya is within the
prescribed schedule given to the DoE," Mr. Cusi said, adding that
historically, SPEx had met its previous maintenance schedule.

"It is expected that it will do the same this time," he said.

The DoE said system operator National Grid Corporation of the Philippines
(NGCP) had been tasked to simulate possible power supply scenarios.

Also on the power situation outlook, the Philippine Electricity Market Corp.
(PEMC) will conduct a simulation on the prices at the wholesale electricity
spot market during the Malampaya shutdown. PEMC is WESM's governance body.

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Link to Original Article:
http://www.bworldonline.com/content.php?section=Corporate&title=power-rates-
may-spike-in-march-meralco&id=138157

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com