Sep 262014

MANILA, Philippines – Manila Electric Co. (Meralco) is negotiating with power producers to contract as much capacity as it can for the summer of 2015, officials said.

“We are trying to cover our requirements to the extent that we can,” Meralco president Oscar Reyes said.

According to Reyes, the company is eyeing about 300 megawatts to 400 MW in contracted capacity as part of efforts to have enough power in the summer of 2015.

“We are talking to everybody with capacity that can be offered and procured and the price is accepted by the consumer and the regulator,” he said.

Meralco head of Customer Retail Services Al Panlilio said the power distributor is also assessing the impact of the secondary price cap at the spot market and its effect on power prices.

The Energy Regulatory Commission (ERC) has imposed a secondary price cap at the Wholesale Electricity Spot Market (WESM).

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The price cap is the highest offer that sellers can give when they sell their electricity to the market. Power suppliers with the lowest price get to supply the requirements of distribution utilities but the last offer is the one that sets the price for which they will be paid.

“We’re assessing whether secondary cap will continue. We have to analyze that,” Panlilio said.

Without additional capacity, the Luzon grid faces rotating blackouts for a period of seven to eight weeks in the summer of 2015.

The rotating blackouts may range from one hour to as long as three hours, Petilla told reporters after the briefing.

A red alert means there is severe power deficiency while a yellow alert means reserves are below the minimum level set by the regulator. Yellow alert is reached when the total reserve is less than the capacity of the largest plant on line. For the Luzon grid, this is usually equivalent to 647 MW, or one unit of the Sual Power Plant.

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