Understanding Electricity Prices
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Transcript of Understanding Electricity Prices
UNDERSTANDING ELECTRICITY PRICESFORTUNATO C. LEYNESChairman, Professional RegulatoryBoard of Electrical Engineering
Vice PresidentLocal Retail Electricity SupplierManila Electric Company
13th IIEE Central Luzon Regional ConferenceOctober 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-by-
minute.• However, consumers may pay rates based on a flat rate based on
the dispatch of the generating plant or on the seasonal and time-based 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 Charge accounts for large percentage of Bill
Generation
Transmission
Distribution & Supply
End-users
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/
NATURAL GAS
GEOTHERMAL
COAL
HYDRO
OIL THERMAL
DIESELD
eman
d (M
W)
0
2,000
4,000
6,000
8,000
T I M E12MN 2AM 4AM 6AM 8AM 10AM 12NN 2PM 4PM 6PM 8PM 10PM 12MN
STACKING OF POWER PLANTS
G4
Price(P/MWh)
Electricity Demand
Offers to Sell
Quantity (MW)Quantity
System Marginal Price
G1G2
G3
G3 sets the Market Price
G3
WESM OverviewDetermining Schedules and System Marginal Price
16Source:
LMPGeneration
Price(SMP)
= Cost ofLosses+
TransmissionCongestion
Cost+
Cost of supplying energy at a specific location, considering generation price, cost of losses and cost of transmission congestion
Metro ManilaTrading Nodes
Laguna/BatangasMarket Trading Nodes
ZambalesMarket Trading Nodes
Nueva EcijaMarket Trading Nodes
WESM OverviewLocational Marginal Prices (LMP) aka Nodal Prices
Source:
WESM HISTORICAL PRICES
Source:
NPC TIME OF USE RATES WITH SEPT 2011 ADJUSTMENTS
Dry Season Ave = 4.3066 Wet Season Ave = 4.0645
-
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
T I M E
P/k
Wh
Dry Weekday Dry Sun/Hol Wet Weekday Wet Sun/Hol
LOAD MANAGEMENT TO LOWER ELECTRICITY COST
LOAD FACTOR = 83%
AVERAGE RATE:
DRY = P5.4929/kWh WET = P5.1224/kWh
-
0.20
0.40
0.60
0.80
1.00
1.20
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
HOURLY LOAD
LOAD MANAGEMENT TO LOWER ELECTRICITY COST
LOAD FACTOR = 64%
AVERAGE RATE:
DRY = P6.0794/kWh WET = P5.7114/kWh
-
0.20
0.40
0.60
0.80
1.00
1.20
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
HOURLY LOAD
LOAD MANAGEMENT TO LOWER ELECTRICITY COST
LOAD FACTOR = 71%
AVERAGE RATE:
DRY = P5.7775/kWh WET = P5.3860/kWh
-
0.20
0.40
0.60
0.80
1.00
1.20
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
HOURLY LOAD
LOAD MANAGEMENT TO LOWER ELECTRICITY COST
LOAD FACTOR = 89%
AVERAGE RATE:
DRY = P5.0445/kWh WET = P4.7014/kWh
-
0.20
0.40
0.60
0.80
1.00
1.20
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
HOURLY LOAD
LOAD MANAGEMENT TO LOWER ELECTRICITY COST
LOAD FACTOR = 97%
AVERAGE RATE:
DRY = P5.2234/kWh WET = P4.8779/kWh
-
0.20
0.40
0.60
0.80
1.00
1.20
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
HOURLY LOAD
MERALCO TIME OF USE RATESDRY SEASON(JAN. – JUNE)
WET SEASON(JULY – DEC.)
WEEKDAY (MON. TO SAT.)PEAK RATE P6.4852/kWh P6.1053/kWhOFF-PEAK RATE P3.0925/kWh P3.0952/kWhWEEKEND (SUNDAY)PEAK RATE P6.4852/kWh P6.1053/kWhPEAK RATE P3.0925/kWh P3.0952/kWh
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 PeriodsMonday 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)
MOVEMENT OF ELECTRICITY PRICES
-
2.0000
4.0000
6.0000
8.0000
10.0000
12.0000
Aug
-07
Oct-0
7
Dec
-07
Feb-0
8
Apr
-08
Jun-
08
Aug
-08
Oct-0
8
Dec
-08
Feb-0
9
Apr
-09
Jun-
09
Aug
-09
Oct-0
9
Dec
-09
Feb-1
0
Apr
-10
Jun-
10
Aug
-10
Oct-1
0
Dec
-10
Feb-1
1
Apr
-11
WESM
Generation Charge
Ecozone Rate
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
FIRM (PhP/kW/Month) NON-FIRM (PhP/kW/Month)
17.10 0.5622
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
POWER DELIVERY SERVICE RATE
SYSTEM OPERATOR CHARGE
Note: Non-firm charge is calculated as Firm x (12 months / 365 days)
ERC-APPROVED NGCP TRANSMISSION CHARGES
Source: http://www.ngcp.ph/documents/7_27_2011_NGCP_RATE_SCHEDULE.pdf
Firm Non-Firm Firm Non-Firm Firm Non-Firm
2011 (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
POWER DELIVERY SERVICE (PDS) RATE*
LUZON VISAYAS MINDANAO
* Based on CY2011 Maximum Annual Revenue (MAR) of Php46,284.78 Mn
ERC-APPROVED NGCP TRANSMISSION CHARGES
Voltage Level(s)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
Below 13.8 kV 384 224
Source: ERC Case No. 2010-152RC
METERING SERVICE PROVIDER CHARGE
(PhP/Metering Point/Month)
Common Asset Charge 2,297
ERC-APPROVED DISTRIBUTION RATES
Source: http://nicknich3.posterous.com/
IN CONCLUSION …
BILLING COMPONENTS OF ELECTRIC BILL PER CUSTOMER CLASS(JAN – AUG 2011)
SOURCE: MERALCO-UED
49.4%
6.2%9.8%
27.3%
7.3%
RESIDENTIAL
56.4%
5.7%
12.3%
14.8%
10.8%
COMMERCIAL
63.8%5.1%
12.5%
9.5%9.1%
INDUSTRIAL
GENERATION SYSTEM LOSS TRANSMISSION DISTRIBUTION TAXES, UNIVERSAL
ELECTRICITY RATE FOR RESIDENTIAL CUSTOMERS (SEPT 2011)
kWh Consumption Gen. Charge Ave. Rate(P/kWh)
50 5.2051 5.276670 5.2051 6.7534
100 5.2051 8.2134200 5.2051 10.2647300 5.2051 10.6753400 5.2051 11.0844500 5.2051 11.8248600 5.2051 11.8150700 5.2051 11.8151800 5.2051 11.8215900 5.2051 11.8264
1000 5.2051 11.83041500 5.2051 11.87563000 5.2051 11.99585000 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/