The Department of Energy has asked the Manila Electric Co. (Meralco) to reduce its exposure to the Wholesale Electricity Spot Market (WESM) to avoid excessive price hikes in the coming months.
The utility giant earlier explained through a television advertisement that power rates are high usually because of price volatility in WESM.
But Energy Secretary Jericho Petilla noted that getting supply from WESM has never been mandatory.
“I’m asking Meralco to explain why they are getting so much supply from WESM when it is actually optional because if you contracted everything, you wouldn’t have a problem,” Petilla told reporters.
“We wish to inquire on Meralco’s plans to secure its energy requirements in the coming months given the expected price volatility in WESM during these periods,” the DOE chief said in a letter recently sent to Meralco.
“When they [Meralco] told me that their power rates spiked because of WESM, the only answer we have in DOE is, why do you even have to get supply from it when it’s not mandatory?” he asked.
Petilla, however, clarified that he does not doubt the credibility of Meralco’s rates.
“I already know that more or less, Meralco will say that it is cheaper on the overall not to fully contract but to play in WESM instead,” he said.
When asked for comments, Meralco did not give any reply.
Meralco almost charged its consumers an unprecedented rate hike of P4.15 per kilowatt-hour in December 2013, which the utility blamed for the spike in WESM prices during the November 2013 supply month.
The Supreme Court, however, stopped the rate increase.