UNDERSTANDING ELECTRICITY PRICES FORTUNATO C. LEYNES Chairman, Professional Regulatory Board of Electrical Engineering Vice President Local Retail Electricity Supplier Manila Electric Company 13th IIEE Central Luzon Regional Conference October 8, 2011
SOME KEY FACTORS THAT AFFECT THE PRICE OF ELECTRICITY • • • • •
Fuels — Nuclear is cheapest while coal is relatively inexpensive and natural gas tends to be more costly, bunker or diesel are the most costly. Power plants — Construction and maintenance costs vary for different kinds of power plants. Transmission and distribution lines — Maintaining and using the transmission and distribution systems to deliver electricity contribute to the cost of electricity. Weather conditions — Dry season and wet season where water for hydropower generation is a large variability. Extreme heat can increase the demand for electricity for cooling. Regulations — The prices for transmission and distribution are fully regulated by the Energy Regulatory Commission; generation cost recovery, whilst regulated for distribution utilities, is unregulated for bidding in the Wholesale Electricity Spot Market, only price a cap is set by the ERC.
Electricity Prices Vary by Type of Customer and Over Time • • • • •
• •
Prices are usually highest for residential consumers Industrial consumers also use more and can take their electricity at higher voltages so it does not need to be stepped down. These factors make the price of power to industrial customers closer to the wholesale price of electricity. The cost to generate electricity actually changes minute-byminute. However, consumers may pay rates based on a flat rate based on the dispatch of the generating plant or on the seasonal and timebased cost of electricity, as in the Time of Use (ToU) rates of NPC and Meralco. Changes in prices generally reflect variations in electricity demand, availability of different generation sources, fuel costs, and plant availability. Prices are usually highest in the summer because more expensive generation is added to meet the higher demand.
COMPONENTS OF ELECTRICITY BILL Generation Transmission Distribution & Supply End-users Generation Charge accounts for large percentage of Bill
GENERATION CHARGES
GENERATOR PAYMENTS • CAPACITY-BASED: • MONTHLY CAPACITY PAYMENT + MONTHLY FIXED O&M + ENERGY FEE + VARIABLE O&M
• BASIC ENERGY RATE: • MONTHLY FIXED PAYMENT + ENERGY FEE + VARIABLE O&M
LEVELIZED POWER PLANT COSTS AT 2009 COSTS
FOREX MOVEMENT
Source: http://nicknich3.posterous.com/
USA ANNUAL INFLATION RATE
PHL ANNUAL INFLATION RATE
HISTORICAL PRICES OF CRUDE OIL
HISTORICAL PRICES OF COAL
Source: http://www.infomine.com/
COMPARATIVE PRICE MOVEMENT OF COAL AND CRUDE OIL
Source: http://nicknich3.posterous.com/
HISTORICAL PRICES OF NATURAL GAS
Source: http://www.eia.gov/
STACKING OF POWER PLANTS 8,000
DIESEL OIL THERMAL HYDRO
Demand (MW)
6,000
NATURAL GAS 4,000
COAL
2,000
GEOTHERMAL
0 12MN
2AM
4AM
6AM
8AM
10AM
12NN TIME
2PM
4PM
6PM
8PM
10PM
12MN
WESM Overview Determining Schedules and System Marginal Price
Price (P/MWh) Electricity Demand
Offers to Sell System Marginal Price
G3 sets the Market Price G3
G3
G2
G4
G1 Quantity
Source:
Quantity (MW) 16
WESM Overview Locational Marginal Prices (LMP) aka Nodal Prices Cost of supplying energy at a specific location, considering generation price, cost of losses and cost of transmission congestion
LMP
=
Zambales Market Trading Nodes
Generation Price + (SMP)
Cost of Losses
+
Transmission Congestion Cost
Nueva Ecija Market Trading Nodes
Metro Manila Trading Nodes
Laguna/Batangas Market Trading Nodes
Source:
WESM HISTORICAL PRICES
Source:
NPC TIME OF USE RATES WITH SEPT 2011 ADJUSTMENTS 8.000
7.000
6.000
P/kWh
5.000
4.000
3.000
2.000
Dry Season Ave = 4.3066
Wet Season Ave =
4.0645
1.000
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
TIME Dry Weekday
Dry Sun/Hol
Wet Weekday
Wet Sun/Hol
19
20
21
22
23
24
LOAD MANAGEMENT TO LOWER ELECTRICITY COST LOAD FACTOR = 83% AVERAGE RATE: DRY = P5.4929/kWh WET = P5.1224/kWh 1.20
1.00
0.80
0.60
0.40
0.20
1
2
3
4
5
6
7
8
9
10
11
12
13
14
HOURLY LOAD
15
16
17
18
19
20
21
22
23
24
LOAD MANAGEMENT TO LOWER ELECTRICITY COST LOAD FACTOR = 64% AVERAGE RATE: DRY = P6.0794/kWh WET = P5.7114/kWh 1.20
1.00
0.80
0.60
0.40
0.20
1
2
3
4
5
6
7
8
9
10
11
12
13
14
HOURLY LOAD
15
16
17
18
19
20
21
22
23
24
LOAD MANAGEMENT TO LOWER ELECTRICITY COST LOAD FACTOR = 71% AVERAGE RATE: DRY = P5.7775/kWh WET = P5.3860/kWh 1.20
1.00
0.80
0.60
0.40
0.20
1
2
3
4
5
6
7
8
9
10
11
12
13
14
HOURLY LOAD
15
16
17
18
19
20
21
22
23
24
LOAD MANAGEMENT TO LOWER ELECTRICITY COST LOAD FACTOR = 89% AVERAGE RATE: DRY = P5.0445/kWh WET = P4.7014/kWh 1.20
1.00
0.80
0.60
0.40
0.20
1
2
3
4
5
6
7
8
9
10
11
12
13
14
HOURLY LOAD
15
16
17
18
19
20
21
22
23
24
LOAD MANAGEMENT TO LOWER ELECTRICITY COST LOAD FACTOR = 97% AVERAGE RATE: DRY = P5.2234/kWh WET = P4.8779/kWh 1.20
1.00
0.80
0.60
0.40
0.20
1
2
3
4
5
6
7
8
9
10
11
12
13
14
HOURLY LOAD
15
16
17
18
19
20
21
22
23
24
MERALCO TIME OF USE RATES DRY SEASON (JAN. – JUNE)
WET SEASON (JULY – DEC.)
PEAK RATE
P6.4852/kWh
P6.1053/kWh
OFF-PEAK RATE
P3.0925/kWh
P3.0952/kWh
PEAK RATE
P6.4852/kWh
P6.1053/kWh
PEAK RATE
P3.0925/kWh
P3.0952/kWh
WEEKDAY (MON. TO SAT.)
WEEKEND (SUNDAY)
Peak Periods Monday to Saturday 8:00:01 a.m. to 9 p.m. (13 hours) Sunday 6:00:01 p.m. to 8 p.m. (2 hours) Off-Peak Periods Monday to Saturday 12:00:01 a.m. to 8 a.m. & 9:00:01 p.m. to 12 midnight (11 hours) Sunday 12:00:01 a.m. to 6 p.m. & 8:00:01 p.m. to 12 midnight (22 hours)
Au g0 O 7 ct -0 D 7 ec -0 Fe 7 b0 Ap 8 r-0 Ju 8 n0 Au 8 g0 O 8 ct -0 D 8 ec -0 Fe 8 b0 Ap 9 r-0 Ju 9 n0 Au 9 g0 O 9 ct -0 D 9 ec -0 Fe 9 b1 Ap 0 r-1 Ju 0 n1 Au 0 g1 O 0 ct -1 D 0 ec -1 Fe 0 b1 Ap 1 r-1 1
MOVEMENT OF ELECTRICITY PRICES
12.0000 WESM
10.0000 Generation Charge
Ecozone Rate
8.0000
6.0000
4.0000
2.0000
-
TRANSMISSION AND DISTRIBUTION CHARGES
BUILDING BLOCKS OF PBR
SOURCE: ERC TRAINING ON PERFORMANCE BASED REGULATION
BUILDING BLOCKS OF PBR
SOURCE: ERC TRAINING ON PERFORMANCE BASED REGULATION
BUILDING BLOCKS OF PBR
SOURCE: ERC TRAINING ON PERFORMANCE BASED REGULATION
BUILDING BLOCKS OF PBR
SOURCE: ERC TRAINING ON PERFORMANCE BASED REGULATION
BUILDING BLOCKS OF PBR
SOURCE: ERC TRAINING ON PERFORMANCE BASED REGULATION
BUILDING BLOCKS OF PBR
SOURCE: ERC TRAINING ON PERFORMANCE BASED REGULATION
BUILDING BLOCKS OF PBR
SOURCE: ERC TRAINING ON PERFORMANCE BASED REGULATION
ERC-APPROVED NGCP ESTIMATED TRANSMISSION RATES (UNSMOOTHED)
Source: NGCP Final Determination
ERC-APPROVED NGCP ESTIMATED TRANSMISSION RATES (P/kW/month, nominal)
Source: NGCP Final Determination
ERC-APPROVED NGCP TRANSMISSION CHARGES SYSTEM OPERATOR CHARGE FIRM (PhP/kW/Month)
NON-FIRM (PhP/kW/Month)
17.10
0.5622
Note: Non-firm charge is calculated as Firm x (12 months / 365 days)
POWER DELIVERY SERVICE RATE GRID
(PhP/kW/month) 2009 Average
(PhP/kW/month) 2010 (w/out PIS)
Change 2010 from 2009
LUZON
314.90
355.94
13.02%
VISAYAS
342.50
334.51
(2.32%)
MINDANAO
323.78
330.97
2.22%
Source: ERC Case No. 2010-152RC
ERC-APPROVED NGCP TRANSMISSION CHARGES POWER DELIVERY SERVICE (PDS) RATE* LUZON 2011
VISAYAS
MINDANAO
Firm
Non-Firm
Firm
Non-Firm
Firm
Non-Firm
(PhP/kW/mo.)
(PhP/kW/day)
(PhP/kW/mo.)
(PhP/kW/day)
(PhP/kW/mo.)
(PhP/kW/day)
January
355.61
11.69
370.50
12.18
381.75
12.55
February
352.56
11.59
367.55
12.08
380.49
12.51
March
354.81
11.66
368.30
12.11
379.41
12.47
April
354.96
11.67
369.75
12.16
374.88
12.32
May
355.14
11.68
368.67
12.12
375.33
12.34
June
355.51
11.69
372.97
12.26
374.25
12.30
* Based on CY2011 Maximum Annual Revenue (MAR) of Php46,284.78 Mn
Source: http://www.ngcp.ph/documents/7_27_2011_NGCP_RATE_SCHEDULE.pdf
ERC-APPROVED NGCP TRANSMISSION CHARGES METERING SERVICE PROVIDER CHARGE (PhP/Metering Point/Month) Common Asset Charge
Voltage Level(s)
2,297
FULL METERING CHARGE (PhP/Metering Point/Month)
METER ONLY CHARGE (PhP/Metering Point/Month)
230 kV
25,140
9,866
138 / 115 kV
15,818
9,800
69 / 67 kV
10,503
4,150
34.5 / 23 kV
2,544
534
13.8 kV
1,182
478
384
224
Below 13.8 kV
Source: ERC Case No. 2010-152RC
ERC-APPROVED DISTRIBUTION RATES
Source: http://nicknich3.posterous.com/
IN CONCLUSION …
BILLING COMPONENTS OF ELECTRIC BILL PER CUSTOMER CLASS (JAN – AUG 2011) RESIDENTIAL
COMMERCIAL
7.3%
INDUSTRIAL
10.8%
9.5%
9.1%
14.8%
27.3% 49.4%
12.5% 12.3%
9.8%
5.1%
63.8%
5.7%
6.2%
GENERATION
56.4%
SYSTEM LOSS
TRANSMISSION
SOURCE: MERALCO-UED
DISTRIBUTION
TAXES, UNIVERSAL
ELECTRICITY RATE FOR RESIDENTIAL CUSTOMERS (SEPT 2011) kWh Consumption
Gen. Charge
Ave. Rate (P/kWh)
50
5.2051
5.2766
70
5.2051
6.7534
100
5.2051
8.2134
200
5.2051
10.2647
300
5.2051
10.6753
400
5.2051
11.0844
500
5.2051
11.8248
600
5.2051
11.8150
700
5.2051
11.8151
800
5.2051
11.8215
900
5.2051
11.8264
1000
5.2051
11.8304
1500
5.2051
11.8756
3000
5.2051
11.9958
5000
5.2051
12.0438
SOURCE: http://www.meralco.com.ph/
In the US….
COMPARISON OF ELECTRICITY COST WORLDWIDE
SOURCE: http://www.powerengineeringint.com/
COMPARISON OF ELECTRICITY COST WORLDWIDE
SOURCE: http://www.powerengineeringint.com/