By Lenie Lectura - March 20, 2017
Lower Wholesale Electricity Spot Market (WESM) rates recorded in January prompted buyers to source 23 percent of their electricity requirements from the electricity bourse.
The Philippine Electricity Market Corp. (PEMC), operator of WESM, noted a more competitive prices and increased customer sourcing. With mitigating measures in place that will address price spikes, such as the lowering of offer price cap from P62,000 per megawatt-hour (MWh) to P32,000 per MWh and the imposition of secondary price-cap mechanism, effective settlement spot prices (ESSPs) reached its lowest in January 2017 at P1.90 per kilowatt-hour (kWh) since January 2011. ESSP refers to the average prices paid by wholesale customers for energy procured in the WESM.
“The resulting prices resulted in customer confidence, thereby augmenting their supply sourced from the WESM, wherein wholesale customers sourced 23 percent of their electricity requirements from the electricity bourse for the January 2017 billing period. Such exposure of the customers is the highest since December 2006,” PEMC said on Monday.
WESM is a platform for electricity trading that provided the mechanism for the scheduling of generation and pricing of electricity. This reform ignited a transformation in the Philippine electricity industry, as transparency kicked in and changed the landscape that cultivated accountabilities to all industry players.
“The WESM has been an aid to the economic growth of the country and developments in the electric power industry. More than the competition, supply augmentation, investment simulation and advancements that the WESM has contributed in nation-building, the WESM boasts years of integrity through transparency,” PEMC President Melinda Ocampo said.
At the forefront of PEMC’s initiatives is the streamlined processes in the approval of market membership. Processing time of market membership upon completion of requirements has been reduced from 15 days to five days, contributing to the ease of doing business in the power industry. From the initial WESM membership of six participants in June 2006, wholesale market participation now stands at 280, or a fiftyfold increase in market membership.
To allow electric power-industry participants to manage the price movements in the WESM, PEMC commenced the feasibility study on electricity derivatives market. The study aims to assess the legal and technical aspects of implementing a derivatives market and strategize the phased-in market development appropriate to the Philippine context.
Ocampo said over the course of 10 years, PEMC’s reliable performance as the administrator of the country’s sole electricity spot market has steered the power industry into greater efficiency and transparency.