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Higher power rates blamed on coal-fired power plant shutdowns

A SUSTAINABILITY think tank blamed the rise in average power rates last year on power plant shutdowns, which it deployed as an argument against the continued reliance on coal-fired generating facilities.

“The power crisis of 2019, where many of the over 60 instances of red and yellow alerts were recorded during the summer months largely due to unexpected shutdowns of coal-fired power plants, caused price fluctuations that sent electricity rates soaring,” Center for Energy, Ecology, and Development Executive Director Gerard C. Arances said.

The Department of Energy (DoE) reported that the national average electricity rate was P8.41 per kilowatt-hour (kWh) at the end of December, up P0.06 from a quarter earlier. The estimate is part of a periodic data release to update on the progress of the implementation of Republic Act No. 9136, or the Electric Power Industry Reform Act.

The rise in the average power rate is “another question posed as to why DoE is still intent on maintaining and even intensifying our dependence on costly and unreliable electricity from coal for our power needs,” he said.

The DoE maintains a “technology-neutral” stance on power sources, with project proponents gravitating towards mature, bankable technologies like coal power because the costs and risks are broadly understood. It has a target of sourcing 35% of the country’s power from renewable sources over the next decade.

The Luzon and Mindanao grids posted quarter-on-quarter increases of P0.15 to P8.53/kWh and P0.06 to P8.41/kWh, respectively, while the Visayas grid average declined P0.02 to P7.75/kWh.

Electric cooperatives’ average rates fell P0.13 to P9.57/kWh at the end of December, while the average rate among private distribution utilities was at P6.54/kWh at the end of March 2020.

The DoE noted the highest average power rate was recorded in March by Mindanao’s Cagayan Electric Power and Light Co. at P10.85/kWh, while the lowest average rate was registered by Aboitiz Power Corp.’s Lima Enerzone in Luzon at P4.82/kWh.

Manila Electric Co. (Meralco), the country’s largest power utility with around seven million customers, recorded a 9.53% drop in its average rate to P7.97/kWh in March 2020 from P8.81/kWh in December 2019.

The average residential rate fell P1.56/kWh to P9.00/kWh at the end of December, driven by the drop in generation, transmission, and universal charges as well as taxes and subsidies, the DoE said.

The Philippines could have benefited from a 30% reduction in electricity charges if it is primarily powered by renewable sources, Mr. Arances said.

“There is no reason why we should continue relying on coal when we have an abundant supply of cheap and clean energy from renewable sources just waiting to be tapped,” he said.

Last year, renewable power accounted for 20.8% or 22,044 gigawatt-hours of power generated, with coal accounting for 54.6%. — Adam J. Ang