Power rates expected to drop in coming months

The Philippines can expect power prices to go down in the coming months amid softening global coal prices and declining rates at the Wholesale Electricity Spot Market (WESM), according to the Energy Regulatory Commission (ERC).

ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said the agency expects power rates to continue falling in the next few months.

“Over the summer months there is always a trend towards higher rates because of the increased demand. And now what we see over the last few months, also because the global prices for coal have really been softening, the prices in WESM are also declining, that’s what we see,” she said before the Joint Congressional Energy Commission hearing on Thursday.

Ms. Dimalanta made the statement in response to Bataan Rep. Albert S. Garcia’s question if the ERC expects power rates to continue their downtrend.

“Although what we see in the generation rates being passed on, they are not decreasing at the pace commensurate to the pace at which coal prices are decreasing. That’s part of the analysis we are conducting in the commission.”

Power rates in areas covered by Manila Electric Co. (Meralco) fell this month as the generation charge declined for a third straight month.

Meanwhile, the Department of Energy (DoE) does not expect to have a shortfall in power reserves in the Luzon grid for the rest of the year.

“Our available capacity, including the current resumption of operation in Ilijan, will provide ample supply and reserve to the Luzon grid,” Energy Assistant Secretary Mario C. Marasigan said during the same hearing.

He said there may be potential yellow and red alerts in the Visayas during peak hours in the afternoon, but “this will be easily resolved” by the transfer of electricity coming from the Luzon-Visayas interconnection, as well as the ongoing testing and commission of the Mindanao-Visayas interconnection project.

“We have excess capacity in Mindanao, so we don’t see any alerts in Mindanao,” Mr. Marasigan said.

Delays
At the same time, the DoE vowed to keep a close eye on renewable energy (RE) service contractors who fail to implement their projects on time, saying these projects may be canceled if delays continue.

“A service contractor has certain deliverables so we are strictly monitoring this so that if they fail to deliver according to their schedule, we would be able to cancel them,” Mr. Marasigan said.

This came after Marinduque Rep. Lord Allan Jay Q. Velasco and Senate Energy Committee head Senator Rafael “Raffy” T. Tulfo questioned why the DoE has not addressed red tape and right-of-way issues that have delayed the implementation of RE projects.

“Since we’re already starting with renewables and we’re targeting 35% in our energy mix, I hope the DoE can come up with a plan as early as now to resolve these right-of-way problems,” Mr. Velasco said. “This is the crux of the problem [delay of projects].”

Mr. Tulfo said the DoE should regularly monitor these RE projects.

“We can’t just keep giving permits to these developers that fail to implement their projects,” Mr. Tulfo said in Filipino.

Mr. Marasigan assured the lawmakers that the DoE conducts a yearly review on the execution of RE projects.

RE accounts for 22% of the Philippine energy mix. The government is aiming to increase its share to 35% by 2030 and 50% by 2040. — S.J.Talavera and J.V.D.Ordoñez