The Energy Regulatory Commission (ERC) prescribed a lower amount of incremental fuel cost to be recovered by Manila Electric Company (MERALCO) from its customers as a result of the Shell Philippines Exploration (SPEX)- Malampaya Natural Gas Facility maintenance shutdown from 28 January to 16 February 2017.   The ERC’s computation reflected a lower total fuel cost in the amount of PhP1.752 Billion compared to MERALCO’s proposal of PhP2.417 Billion, or a difference of some PhP665 Million.  The amount was lower as the ERC’s calculation made use of the previous month’s actual fuel cost, while MERALCO’s computations were based on forecasted fuel cost. 

Consequently, the differential amount to be incorporated in the Generation Charge shall be PhP0.2211/kWh, instead of MERALCO’s proposed PhP0.30/kWh. The ERC directed MERALCO to implement the collection of the incremental fuel cost on a 3-month staggered basis for the billing covering the months of March to May 2017. 

MERALCO filed on 31 January 2017 its application with the ERC for the approval of the staggered recovery and payment of the differential Generation Charge for the February 2017 supply month, with prayer for provisional authority in view of the Malampaya shutdown from 28 January to 16 February 2017 which affected the supply of natural gas to the power plants of SPPC-Ilijan, Sta. Rita, San Lorenzo, San Gabriel and Avion. These plants supply an aggregate capacity of 3,211 MW to the Luzon Grid, of which 2,565 MW is supplied to MERALCO’s franchise area.

The said Malampaya shutdown coincided with the scheduled maintenance of the other power plants such as SEM-Calaca Power Corp. Unit 1 and Quezon Power (Philippines), Ltd. which collectively contributes some 585 MW of MERALCO’s power requirements.  Essentially, MERALCO had to source its power requirements from other power suppliers that use liquid fuel which is more costly than natural gas.  

“The ERC remains true to its mandate of upholding and protecting the interest of the consuming public by ensuring that what is billed is reasonable and not excessive without compromising the continuity of electric service.  We will keep on finding and devising initiatives that will work for the benefit of the consumers by achieving competitive power rates and quality service from electric service providers,” ERC Chairman and CEO Jose Vicente Salazar stated.