Petilla: Meralco TRO won’t lead to brownouts

MANILA, Philippines – Despite a warning from the Manila Electric Company (Meralco) that the temporary restraining order (TRO) on its rate hike would constrain its ability to supply power, Energy Secretary Jericho Petilla has given assurances that rotational blackouts were an unlikely scenario. 

Why is this so? Petilla said he believes that power generators were “responsible players” in the industry. 

“I am confident that the generators, even if they are not paid in full at this point, don’t want to cause any brownouts. The generators see Meralco as a long-term client. Meralco sees generators as a long-term supplier. It’s a long-term relationship that they have,” Petilla said.  

The Supreme Court temporarily stopped Meralco from implementing a P4.15 per kilowatt hour (kWh) power rate hike in December 2013. Accounting for about 65% of power charges, the increase was due largely to higher generation charges for the power purchased by Meralco from generators.

In its response-comment to a petition filed against the power rate hike before the Supreme Court, Meralco warned that the whole power industry may be incapacitated should the TRO continue. 

“The entire power industry may come to a screeching halt. One can readily imagine the dire consequences to the economy and security of the country should this happen, as there will surely be rotating blackouts throughout Meralco’s franchise area,” Meralco said.

Meralco said power transmission provider National Grid Corporation of the Philippines (NGCP) and power suppliers San Miguel Energy Corporation, AES Masinloc and South Premier Power Corporation have been demanding the country’s largest power distributor to pay up. 

Meralco has started paying them in installments, Petilla said.

The company earlier blamed its rate hike on the purchase of more expensive power from the Wholesale Electricity Spot Market (WESM) following the shutdown of the Malampaya natural gas facility and simultaneous outages of other power plants.

The Supreme Court ordered the inclusion of Meralco suppliers, including those that trade in the WESM in the price hike case. The High Court also included NGCP and WESM operator Philippine Electricity Market Corporation in the case.

Should the TRO be lifted, Petilla said the Department of Energy (DOE) will find a way to mitigate the cost of the charge for consumers. 

Inventory being conducted 

Except for the legal battles troubling the industry, Petilla stressed there are no foreseen shortages in the power supply. 

But the DOE chief admits there is a possibility that smaller power plants may not be able to cope should Meralco fail to pay them in full. 

DOE is planning to conduct an inventory of the power plants. 

“The way I look at it, it’s going to be the oil-based companies, the diesel plants. We’re now going to get in touch with them and ask them ‘What is your inventory position? How long are you going to be ready for summer? So, that’s what we’re looking at. We’re also looking at various ways of actually giving them the fuel if  in case the issue between Meralco and generators are not resolved between them.

“I don’t think we would go to that extent of saying that we will all have brownouts because I’m not getting paid. I think the generators are responsible players in the industry,” said Petilla. – Rappler.com