MANILA, Philippines - With prices at the Wholesale Electricity Spot Market (WESM) shooting through the roof last month, the generation charge of Manila Electric Company (Meralco) will climb by P0.32 per kilowatt hour (kWh) this July to P6.4575 from last month's P6.1375 per kWh.
Given the yellow and red alert conditions in the Luzon grid which indicated extremely tight supply, spot market prices soared to P20.73 per kWh for the supply month of June, higher by P4.43 per kWh from May.
It did not even help that Meralco just purchased a measly portion of its supply from the WESM; and the bulk of its off-take from contracted independent power producers (IPPs) and state-run National Power Corporation (NPC) which relatively have lower and more stable prices.
"Although WESM only accounted for 6.0-percent, its rates pushed the overall generation charge up," the utility firm said.
WESM prices soared to P45 and P46 per kWh for several trading hours last month due to the de-rated capacity as well as simultaneous shutdowns of power plants.
Meralco has apprised its customers that "this is (already) the second consecutive month that WESM prices went up."
The company noted that "11 out of the 31 days in the June supply month experienced yellow/red alerts versus only three days in May."
In fact, power industry watchers and experts have stressed that last month's experience was unusual because June is already the kick-off of the rainy season - so aside from lower demand, the hydro plants were also expected to have higher dispatch.
However, the forced outages as well as scheduled maintenance of some coal plants severely strained supply conditions in the grid, thus, the spike in electricity spot prices.
Meralco is also bracing for another round of adjustment in generation charge for August billing with the scheduled shutdown of the Malampaya gas production facility starting this July 9 to the 20th.
The gas-fired power plants will have to shift to the more expensive fuels, like diesel and condensate; while the Malaya thermal plant will also be dispatched as must-run unit. These are clear manifestations that consumers will be shouldering higher rates in their electric bills next month.
"Meralco advised its customers that the generation charge could further increase in the August billing month. This is due to the scheduled eight-day maintenance," the power utility firm has specified in a statement to media.
It added that even the P0.056 per kWh decline in the selling price of state-run NPC and the considerably lower rates of its contracted IPPs failed to offset the drastic spike in WESM prices.