SUMMARY
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MANILA, Philippines – The Energy Regulatory Commission (ERC) said Thursday, July 31, that it was looking at extending the secondary price cap in the Wholesale Electricity Spot Market (WESM) amid tight power supply.
The ERC had earlier extended for 45 days or until August 9 the secondary price cap amounting to P6.245 ($0.14) per kilowatt-hour (kWh).
“For the secondary cap, the ERC is looking at the possibility of extending this beyond Saturday, August 9. If so, the ERC will file another resolution to extend it,” ERC Executive Director Francis Saturnino Juan said.
“We will also look at the appropriate threshold. We’re looking at the prices, if these are sufficient to allow recovery for the generating companies,” Juan said.
Prices at WESM are determined by supply and demand. When supply becomes tight and demand goes up, prices rise.
WESM was created under Republic Act 9136 or the Electric Power Industry Reform Act, with the objective of bringing power costs down in Luzon and Visayas regions by providing a centralized venue for buying and selling electricity.
Fear of price spikes renewed
Industry experts are worried that without the extension, price spikes may occur at the spot market again. (READ: Power emergency: What it means)
WESM prices reached unreasonable levels in November and December last year because of the Malampaya shutdown. Market clearing prices reached the ceiling of P62 ($1.43) per kWh more often than usual and even during off-peak hours when demand for electricity was low. (READ: DOE: Malampaya shutdown can no longer be moved)
The WESM tripartite committee thus convened in December and discussed adjustments to the price cap, recognizing the need to constantly put in place measures to address price volatility.
The committee reduced the offer price cap to P32 ($0.74) per kWh for 90 days.
“For the primary price cap, we are also looking at an appropriate price cap but it will be the committee that will decide,” said Juan referring to the Department of Energy, ERC and WESM operator, Philippine Electricity Market Corporation. – Rappler.com
*($1 = P43.46)
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