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April 23, 2015

LPGMA Rep: Power rates should remain low despite Malampaya shutdown

There’s no reason for the Manila Electric Company (Meralco) and other power distributors to jack up rates despite the 30-day shutdown of the Malampaya natural gas field as the prices of primary energy sources in the global market have declined, a lawmaker said.
LPG Marketers' Association (LPGMA) party-list Rep. Arnel Ty on Sunday called on power producers and distributors to “allow consumers to benefit from cheaper electricity” owing to the drop in oil and coal prices, as well as the tariff rates of  geothermal power producers.
“Power rates should be going down, on account of the overall decline in energy costs. If producers are cutting their tariffs, electricity distributors should be rolling back, and not jacking up their rates,” he said in a statement.
Last month, Meralco said consumers’ electricity bills will go up in April and May as natural gas power plants shift to a more expensive liquid fuel due to the month-long maintenance shutdown of the Malampaya gas line.
According to Meralco utility economics head Larry Fernandez, the generation charge is expected to increase by around P0.46 per kilowatt hour (kWh) and by around P0.72 per kWh in May on assumptions of the cost of biodiesel and condensate liquid fuel.
Declining fuel prices
But even if the power generators dependent on Malampaya have to run on alternative fuels, Ty said these companies can keep electricity rates low since the costs of those substitutes are also down.
For instance, he said, geothermal power producers such as the Lopez-owned Energy Development Co. (EDC) slashed the average tariff of its Palinpinon-Tongonan geothermal plants by around 7.5 percent to remain competitive with coal-based power suppliers.
In addition, the price of the global benchmark Brent crude oil has plunged below $55 per barrel, from a high of $115 in June last year, due to a global glut in supply amid falling demand.
Based on predictions by energy market analysts, oil prices will likely dip further once the United States and Europe reach a nuclear deal with Iran as the subsequent easing of sanctions could result in the influx of Iranian oil exports.
According to Ty, some 41.4 percent of the country’s power supply is derived from geothermal resources; 28 percent from coal; 15 percent from natural gas; 11.4 percent from hydro; 3.9 percent from diesel and fuel oil; and the rest from biomass, biodiesel, solar and wind energy. — Xianne Arcangel/BM, GMA News 
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