The Department of Energy (DOE) has blamed the Wholesale Electricity Spot Market (WESM) for the unprecedented rate increase being sought by the Manila Electric Co. (Meralco).
Documents submitted by DOE officials to the Supreme Court showed that several generation companies did not offer electricity at the spot market during the crucial period when the Malampaya plant was shut down late last year for maintenance. Malampaya provides the bulk of power requirements in Luzon.
The Supreme Court stopped Meralco from charging the rate increase in December.
Meralco said it was forced to buy power at higher rates because other power plants also shut down.
Meralco imposed an unprecedented P4.15 per kilowatt-hour increase in its December billing.
“There are substantial capacities not offered in the market, net of AS [Ancillary Services] and Outages. This ranges from 1,546 megawatts to 2,703 MW. During the hour with highest MCP [market clearing price]at 10 p.m. trading interval, the capacity not offered was 2,058 MW, thus the market cleared during the interval was at very high price,” the DOE said.
It was referring to the November 13, 2013 scenario where the highest MCP was set by Therma Mobile Inc. (TMO), a supplier of Meralco, at P61.559 per MW hour.
The DOE said even when the Malaya Thermal Power Plant (MTPP) was running on December 5, 2013, the MCPs were still high. Malaya is a 650-megawatt oil-fired power plant owned by the Power Sector Assets and Liabilities Management (PSALM) Corporation.
“In fact, there were more number of intervals when the offered prices were cleared at approximately P62 per kwh, all of them during off-peak hours,” according to the documents DOE submitted to the Supreme Court.
“The capacities not offered range from 2,078 MW (10 am) to 3,148 MW (2 a.m.) This explains the reason for the high prices because there were significant capacities not offered during the period. At the sample period, 8 a.m., the capacities not offered was 2,392 MW,” the DOE added.
The alleged shortfall prompted Meralco to peg its December 2013 hike at P4.15 per kwh, of which P2.18 per kwh came from WESM price adjustments.
In a related development, the Energy Regulatory Commission (ERC) will come out with the proper rates that should have been followed during the crucial months when power plants went offline.
“The logic dictates that these are not the proper prices . . . computation for December follows that of January,” Energy Secretary Jericho Petilla said, referring to the P4.15 per kwh increase in December and the P5.30 per kwh in the January billing.
Meralco officials expressed hopes that the Court will soon lift its temporary restraining order that stopped the implementation of the rate hike.
“They should expedite the investigation. Findings of the investigation will implement the appropriate action to reflect the true cost of the WESM price,” William Pamintuan, Meralco first vice president and head of the legal department, said.