Senate grills energy officials over power rate hike

Posted at 01/23/14 1:01 PM

MANILA (UPDATE) – The Senate Committee on Energy on Thursday resumed its investigation into Manila Electric Co.’s (Meralco) power rate increase.

Committee chairman Senator Serge Osmeña reprimanded energy officials for their failure to prevent prices at the electricity spot market from going up from November to December 2013, when spot market rates reached the ceiling price of P62 per kilowatt hour (kwh).

Energy officials said there was no power supply shortfall during that period even though the Malampaya natural gas plant had a scheduled shutdown.

Default News template and player embed

Osmeña and Senator Francis Escudero also questioned why the Power Sector Assets and Liabilities Management Corporation (PSALM) did not run the Malaya power plant in Rizal, which could have boosted supply by 300 megawatts and lowered prices at the spot market.

Escudero said Malaya failed to serve its purpose of providing “much needed capacity in Luzon.”

PSALM department manager Abelardo Sapalaran said Malaya was not on a scheduled shutdown but it was on “economic shutdown” because it was too costly to operate.

He added that Malaya acted as a reserve plant during the shutdown of the Malampaya plant.

“Malaya was not on planned shutdown. We were instructed to prepare Malaya to make sure that Malaya will be available during the Malampaya shutdown, in fact, we built up fuel supply for that purpose and we made Malaya ready,” Sapalaran said.

Default News template and player embed

Sapalaran added that PSALM offered a bid of P45 per kilowatt hour at the spot market, but did not synchronize the plant with the bid “to avoid Malaya to run but keep on losing.”

Energy Secretary Jericho Petilla, meanwhile, admitted that there have been recommendations to remove the government-owned Malaya plant from the grid.

“When I came in, nakikita ko na itong Malaya ay masakit sa ulo ng PEMC (Philippine Electricity Market Corporation) because they are perennially offering but not being dispatched. They are offering ng mataas just to comply with the must-offer rule,” he said.

Petilla said because of these difficulties, he has suggested creating a circular to reclassify Malaya as a must-run unit (MRU) and not a regular power plant.

Senator Antonio Trillanes IV, meanwhile, called the Energy Regulatory Commission (ERC) the “biggest culprit” in the unprecedented hike.

“You are supposed to safeguard the interest of the consumers, you allowed this to happen, you have enough power under the Epira law but you chose not to exercise it. You chose to look the other way and now we have this big problem that is going to be a big burden to the consumers,” he said.

He described the ERC as a “rubber stamp” for hastily approving rate hike proposals. ERC chairperson Zenaida Ducut denied the senator’s allegations.

Meralco implemented a staggered P4.15 per kwh increase in 2013 that was approved by the ERC.

The increase was later halted by a 60-day temporary restraining order issued by the Supreme Court.