Meralco blames high rate hike on WESM violations


THE Manila Electric Co. (Meralco) has asked the Energy Regulatory Commission (ERC) to direct Philippine Electricity Market Corp. (PEMC), operator of the Wholesale Electricity Spot Market (WESM), to recalculate spot market transactions to determine the true cost of electricity when the Malampaya plant and other power producers shut down.

The utility firm said violations of WESM rules triggered the price spike at the electricity trading market.

In November, Meralco asked the ERC’s approval to allow the company to stagger the collection of the P4.15 per kilowatt-hour (kwh) increase, which it blamed on the shutdown of the Malampaya natural gas field and other power plants.

The Supreme Court stopped the implementation of the record rate increase in December. Energy Undersecretary Rafael Aguilos said there could have been collusion among power generators to manipulate prices.

In the motion it filed at the ERC, Meralco appealed to the commission to direct the PEMC to conduct market reruns or recalculations of WESM transactions and dispatches, determine substituted prices or undertake any other appropriate measures to determine and recalculate the true cost of electricity last November and December.

”In the interest of Meralco customers, and more importantly, for a comprehensive review of WESM transactions and the validity or otherwise of the abnormal and excessively high clearing prices during the November and December 2013 supply months, Meralco respectfully brings to the attention of the Honorable Commission critical factors that would account for the high clearing prices and would call for the need to determine whether there should be re-runs or downward adjustments to the proper applicable prices,” the utility firm said.

Meralco said it was clear during the congressional hearings that there have been gross violations of WESM regulations during the Malampaya shutdown, as well as protocols on generation offers and plant dispatch by certain market participants.

”The available capacity as reported by the NGCP [National Grid Corp. of the Philippines] was, in effect, not made ‘fully available,’” Meralco said.
It said that had the full capacity of certain power generation plants that were not on scheduled, extended or forced outage, including the 610-MW Malaya Thermal Power Plant (Malaya) been offered to the WESM and actually dispatched, Meralco would not have imposed such an unprecedented rate hike.

”Simply put, because of the gross violations of WESM rules, regulations and protocol, available capacity as reported by SO [System Operator] was ‘missing’ from the market, effectively withheld and prevented from responding to demand at the WESM, resulting in significantly higher market clearing prices,” Meralco said.

The country’s system operator is the NGCP.

Meralco had warned that the country may have to endure blackouts in summer if the Supreme Court does not lift the temporary restraining order it issued on the collection of the P4.15 pKw rate increase.

Power rates are expected to soar during the summer months, when electricity demand is high.

Energy Secretary Carlos Jericho Petilla has said the government is prepared to run the Malaya thermal plant in Pililia, Rizal, for up to 70 days to boost supply during summer.

On Thursday, Presidential Communications Secretary Hermino Coloma Jr. said reactivating the plant is part of the government’s steps “to ensure continuity of power supply during the summer season.”

But there are concerns that reactivating the idle Malaya plant could trigger a spike in power rates, instead of bringing the rates down.

What Coloma failed to mention was that Malaya was ordered shut down because apart from being “slow,” it runs on diesel fuel which is very expensive.

Malaya plant manager Virgilio Cruz warned in an earlier interview that consumers should brace for higher electric bills because Meralco is likely pay more for Malaya’s “high operating cost.”

The 650-megawatt plant, Coloma said, would ensure steady supply of electricity come the summer season.

Government previously deemed the plant not financially viable to operate. In fact, the plant did not bid in the spot market when Meralco reported a supply shortage due to the shutdown of the Malampaya natural gas facility in Palawan last November.

Salcon, Malaya’s operator, announced it has enough fuel to run the plant and it will be ready for operation once its owner, the Power Sector Assets and Liabilities Management, gives the go signal.

Coloma reiterated that the Department of Energy “has advised power plants to undertake preventive and regular maintenance of their facilities, so that these will operate optimally during the peak-demand months.”


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  1. sonny herrera jr. on

    all i can see is there are conflicting rules to this PSALM, WESM & ERC in which all are favors to gain sure profits for this companies and not to the interest of the consumers, that is why this is happening. and to those in ERC, a simple words and yet meaningful….”THEY ARE NOT QUALIFIED FOR THEIR POSITION TO RUN THIS GOV’T INSTITUTION FOR THE INTEREST OF THE FILIPINO PEOPLE”

  2. Psalm and PEMC have a lot of explaining to do to the public for the sake of transparency as Meralco is pointing to them as the culprits why the power cost was abnormally high last December. DOE and ERC should do their investigation thoroughly, promptly, without any bias whatsoever and revealed to the public as soon as possible. Some electric cooperatives in other provinces are also following the charging rates of Meralco or even higher.