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ERC extends electricity price cap as Luzon faces tight supply

Rappler.com
ERC extends electricity price cap as Luzon faces tight supply
A number of power plants are scheduled to go offline for maintenance in the coming months

MANILA, Philippines – Power supply in Luzon will be tight in the next 6 months as a number of major power plants in the region are scheduled to undergo preventive maintenance shutdown.

In line with this, the Energy Regulatory Commission (ERC) extended the implementation of a secondary price cap in the electricity spot market to protect consumers from sudden price spikes.

In all, 3,651 megawatts (MW) of capacity are expected to go offline for the rest of the year. Based on the Grid Operating and Maintenance Program submitted by the National Grid Corporation of the Philippines to regulators, the following plants are scheduled to go offline:

  • Pagbilao 1 (375 MW) – offline June 10 to July 9
  • Pagbilao 2 (382 MW) – July 16 to August 14
  • Sta. Rita Module 20 (250 MW) – September 6 to 20
  • Sual 1 (647MW) – September 12 to October 11
  • Sual 2 (647MW) – August 16 to September 14
  • Sta. Rita Module 40 (250 MW) – February 28 to December 31
  • San Lorenzo Module 50 (250MW) – October 25 to 29
  • Sta. Rita Module 30 (250 MW) – November 1 to 5
  • San Lorenzo Module 60 (250 MW) – November 8 to 12
  • Malaya 2 (350 MW) – November 8 to December 23

Based on the Department of Energy’s power supply-demand outlook for the Luzon grid for June to December 2014, the ERC said there would be “insufficient available capacity for contingency and dispatchable reserve requirements during the period.”

“The required capacities for contingency and dispatchable reserves are expected to become available in the last quarter of 2014 provided that the 315 MW total installed capacity of committed power plants will commence operations as targeted,” said the ERC.

The scheduled shutdown of these power plants coincides with the period where reduced generation is expected from hydropower plants due to El Niño, which may affect the generating capability of hydroelectric power plants.

The Philippine Atmospheric, Geophysical and Astronomical Services Administration recently reported that the El Nino phenomenon would commence in June, peak during the last quarter of the year, and last up to the first quarter of 2015.

Price cap

To mitigate high prices in the Wholesale Electricity Spot Market (WESM), which may be caused by the expected tight supply in the coming months, the ERC decided to extend the implementation of a secondary price cap.

“The secondary price cap amounting to P6.245 per kilowatt hour (kWh) imposed by virtue of Resolution No. 08, Series of 2014 and dated May 5, 2014, is hereby extended for 45 days from its expiration on June 25,” said the ERC in its 3-page decision released on Monday, June 23.

Within the 45-day period, a public consultation will be conducted to seek inputs from the stakeholders on whether or not the secondary price cap should be implemented permanently and if the threshold should be changed, and to identify the circumstances or triggers that will warrant a change in the threshold.

WESM operator, Philippine Electricity Market Corporation, was tasked by the ERC to submit mitigating measures that may permanently be applied within 15 days from the date of the ERC resolution.

The secondary price cap was put in place to mitigate sustained high prices in the WESM during the May and June supply months. – Rappler.com

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