By Lenie Lectura - January 17, 2017
Market prices in the Wholesale Electricity Spot Market (WESM) went down to P2.28 per kilowatt-hour (kWh) for the December 2016 billing period, the lowest since January 2011.
Philippine Electricity Market Corp. (PEMC) said on Tuesday that, for the December 2016 billing period, coal accounts 45.5 percent of the electricity generated in the Luzon and Visayas grids. There is a slight increase from the output of geothermal resources at 13.9 percent and wind resources at 2.8 percent.
Distribution utilities and customers directly withdrawing from the grid sourced 21 percent of their requirements from the electricity bourse. The Manila Electric Co., the largest distribution utility in the country, procured 21.96 percent of its supply from the WESM, benefiting from the low prices.
“Prices in the market are result of commercial forces. These market prices send signals to investors to make sound investment decisions on the timing of installation, capacity and type of resources. We see that the WESM plays a pivotal role in a liberalized and deregulated market environment,” said Melinda L. Ocampo, PEMC president.
The WESM is a centralized venue for buyers and sellers to trade electricity as a commodity where its prices are based on demand and supply.
The WESM began commercial operations in Luzon in June 2006 and in the Visayas in December 2010. In June 2013 PEMC launched and integrated the Retail Competition and Open Access (RCOA) into the WESM.
“As we reap the benefits of a working WESM, we are preparing for the full implementation of retail competition where, hopefully, the efficiencies in electricity trading will redound to the benefit of contestable customers,” Ocampo added.
She said the downward trend would continue in the early part of the year, mainly on account of a cooler temperature in January and February, which normally results in lower demand.
The WESM was created by Republic Act 9136, the Electric Power Industry Reform Act of 2001. This provided for the establishment of an electricity market that reflects the actual cost of electricity and lowers its price through more efficient production through competition.
Effective settlement spot prices (ESSPs) in the WESM plunge to P2.28/kWh for the December 2016 billing period, which is the lowest since January 2011. ESSPs refer to the average prices paid by wholesale customers for energy purchased from the spot market.