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Tuesday, January 7, 2014

Malampaya Gas Supply Curb Cuts Firms in Generation Capacity

The gas supply restriction on power plant users as imposed by Malampaya field operator Shell Philippines Exploration B.V. (SPEX) beginning last weekend is expected to trigger a new round of increases in the rates of Manila Electric Company (Meralco). Meralco has started informing it's customers on the factors affecting it's supply so that when it's rates substantially climb again, they will know the real situation even before their bills would reach their doorsteps. The gas plants provide the bulk of the supply for Meralco as they are among the utility firm's contracted capacities. Lower dispatch of the generation facilities due to limited gas from Malampaya will exert pressure on power supply, leading to higher prices. The Malampaya gas production facility just completed a month long maintenance shutdown from Nov. 11, 2013 to Dec. 10, 2013 and it partly caused the Php 4.15 Kw/H rate hike of Meralco that was slapped with a Temporary Restraining Order (TRO) by the Supreme Court. During that period, the gas plants had to shift to liquid fuels like biodiesel and condensate which are more expensive than the Malampaya Natural Gas. Given the confluence of events affecting overall power supply, Meralco already informed the Dept. of Energy (DOE) that it may resort to Manual Load Dropping (MLD) or supply curtailment which could then result in brownouts for it's customers. The power utility firm said it might be compelled to cut down it's supply procurement from the Wholesale Electricity Spot Market (WESM) because of the prevailing payment deferment to it's power suppliers, resulting from the Supreme Court's restraining order on it's rate hike.       
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