THE Manila Electric Co. (Me-ralco) is worried over the sudden price hike at the Wholesale Electricity Spot Market (WESM), saying this could trigger an increase in power rates if it continues to shoot up.
“We have observed that WESM prices since Monday have, at times, been approaching P30 per kilowatt-hour [kWh]. In contrast, for the whole of last week, spot-market prices seldom exceeded P5 per
kWh,” Meralco Utility Economics Head Lawrence Fernandez said.
Meralco sources about 3 percent of its power requirements from the WESM, which serves as the trading floor for the buyers and sellers of electricity.
Fernandez shared this observation after he was asked to give updates on the Malampaya natural-gas supply cut that started on May 10.
“While natural-gas supply normalized this morning [May 14], we were just advised that SPEX [Shell Philippines Exploration BV] will again curtail natural-gas supply,” the Meralco official said.
Early Wednesday, Fernandez said the Malampaya gas power facility was starting to produce more gas compared to last Sunday. In particular, Unit 2 of Kepco Philippines Inc.’s 1,200-megawatt (MW) Ilijan combined cycle plant was switched on again.
Later that day, Energy Secretary Carlos Jericho L. Petilla said, “as far as Malampaya is concerned, they are back to normal.” However, he added, “there could be lag in the switching from liquid to gas.”
The Malampaya facility accounts for 40 percent of the Luzon grid’s requirements. It supplies natural gas to Ilijan and to the 1,000-MW Santa Rita and 500-MW San Lorenzo natural gas plants of First Gas, a subsidiary of the Lopezes’ First Gen Corp.
Fernandez said the latest advisory Meralco received was that “starting 4 p.m., five of the six First Gas units will be forced to shift to liquid fuel.”
No further details were provided as of press time.
Officials from SPEX and the Department of Energy also did not reply when sought for comment. “We have no information why natural-gas supply is curtailed.”
Fernandez said it was too early to say if the curtailment and the recent increases in WESM prices will affect the generation charge, the largest component of a Meralco bill. But the Energy Regulatory Commission has put in place a primary and secondary price cap to address any sudden spike.
Petilla, in a text message, said the spike in WESM could be attributed to the Malampaya incident. “But it’s still lower than summer prices in the last few years.”
Liquid fuel is more expensive than natural gas. However, First Gen President Francis Giles Puno said, the company still has cheaper supply of fuel left. “When we were preparing for the Malampaya shutdown last March, the price of liquid fuel went down. It was, at that time, close to gas,” he said.
“We have, I think, about one week of supply on base -oad. In the meantime, we will order additional fuel just in
case,” he added. In case they need to order additional fuel soon, Puno said the gas seller, which, in this case, is the consortium that runs the Malampaya facility, would have to pay for any additional cost.
“What will happen is the difference will be covered by the gas sellers because, in the first place, we are supposed to be running on natural gas,” said Puno, adding that their power plants are still able to deliver to Meralco its power requirements.
SPEX just recently implemented Phase 3 of the Malampaya project that involves the design, fabrication and installation of a new depletion compression platform (DCP).
Early this year, the MP3 (Malampaya Phase 3) platform has been towed from its fabrication site in Subic Bay and installed beside the existing Malampaya platform in the West Philippine Sea, near Palawan. It is the first offshore gas platform to be built in the Philippines, and MP3’s local fabrication contractor, Keppel Subic Shipyard, constructed a 1,500-ton gantry crane to execute the critical heavy-lift activities.
The platform is designed to float, and an inbuilt jacking system will enable the 80-meter legs to be jacked down to lift the platform from the water into its final position.
Laying the foundation for the installation of the DCP’s legs also required transporting 41,000 tons of rock from a quarry site in Angono, shipping it out of Luzon via the Batangas port, and installing it on the seafloor. SPEX said that, while the task involved numerous challenges, the work was achieved with zero injuries.
MP3 has provided over 1,400 direct new jobs for Filipinos and generated more business for local companies supporting the project.
The Malampaya consortium has remitted $900 million in royalty payment to the national government last year. This brings to $8.5 billion the total payment turned over to the government since the successful commissioning of the project in 2001.