Higher power rates due to 'confluence of events' – Meralco

By XIANNE ARCANGEL, GMA News

Published January 22, 2014 7:21pm

Manila Electric Company (Meralco) said on Wednesday its decision to buy more expensive electricity from the Wholesale Electricity Spot Market (WESM) during the Malampaya gas-to-power platform shutdown late last year was prompted by a “confluence of events” including tight supply that prompted power generators to bid for higher rates.

Meralco director Ray Espinosa told lawmakers at the resumption of the House energy committee’s hearing on the alleged collusion by power industry players to jack up electricity prices that it has been Meralco’s practice to buy energy from WESM only “on the basis of need.”

Meralco gets 90 per cent of its power requirements from generators where it has supply agreements, and the remaining 10 per cent from WESM.

“In terms of sourcing from WESM, we obviously source on the basis of need that is not filled by the contracted capacity,” Espinosa said.

He explained that the uptick in its generation charge from P4.68/kwh in October to P5.67 in November and P9.107 in December was due to the Malampaya shutdown, which created a shortfall of about 2,700 MW out of its customers’ 6,000 MW average demand and the unexplained outages of major power plants in Luzon.

“[Due to these reasons,] we described this period as a confluence of events wherein several supply-related incidents happened at the same time. This [was] a one-time, isolated situation brought about by a coincidence of factors,” Espinosa said.

Last week, Bayan Muna Representative Neri Colmenares claimed in a press conference Meralco dictated power rates in the spot market through its dealings with Aboitiz-owned Therma Mobile Inc. at the height of the Malampaya shutdown in November.

Therma Mobile placed a bid of P62/kWh at the WESM even though it is fully contracted to Meralco at only P8.65/kwh. During the Malampaya shutdown, the plant had an available capacity of 100 MW.

“We don’t need to prove price collusion in essence. When Meralco confirmed that it asked Therma Mobile to bid power rates at P62, for us, the case is done,” Colmenares said.

Colmenares told reporters at the sidelines of the Energy committee hearing that Meralco should be taken to task for asking Therma Mobile to place a bid of P62/kwh at the WESM for 22 times when the Aboitiz firm’s supply is already technically owned by the country’s largest power distributor.

“Inamin ng Meralco na inutusan nila ang Therma Mobile na mag-bid ng P62 kasi ayaw nilang i-dispatch. Akala nila hindi mabibili ‘yun at that price. Nagkamali sila. Pwede namang mangyari yan once, but Meralco bid 22 times. Kung nagkamali ka minsan na nabili pala, okay lang, pero more than three times? Hindi na kami maniniwala diyan,” he said.

The lawmaker added that Meralco should not pass on the high cost of buying electricity at the WESM during the Malampaya shutdown to consumers since it voluntarily chose to purchase its power supply at a higher price.

“Dapat hindi ang taumbayan ang magbayad ng presyo ng kuryente, Meralco dapat. Desisyon nila na mag-bid at P62, nagkamali sila, then it’s [their] fault. Dapat saluhin nila ‘yun,” he said.

A part of the Makabayan bloc in the House that filed a petition before the Supreme Court contesting the controversial P4.15-per-kilowatt-hour rate increase being sought by Meralco, the lawmaker added that Therma Mobile owner and chief executive officer Erramon Aboitiz admitted that the company made high bids but passed the responsibility on to Meralco because the latter has “full control of the use of the 100 MW power from Therma Mobile, including pricing and volume offers to the WESM.” – VS, GMA News

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