WESM price cap extended

Business World Online
Posted on March 31, 2014 12:02:28 AM

A TEMPORARY price cap for power traded at the Wholesale Electricity Spot Market (WESM) has been extended, with concerned agencies noting the need for public consultations.

The WESM tripartite committee -- composed of the Department of Energy, Energy Regulatory Commission (ERC) and Philippine Electricity Market Corp. (PEMC) -- last week issued a joint resolution extending the effectivity of the P32 per kilowatt-hour (kWh) interim offer cap set last December.

“The interim price cap ... is hereby extended for a period of sixty (60) days from 27 March 2014 to allow for the conduct of public consultation on the proposed offer price cap,” the resolution, dated March 26, states.

The original price ceiling of P62/kWh was cut to P32 on Dec. 27 to address WESM price spikes, blamed as one of the causes of a record-high Manila Electric Co. (Meralco) rate hike that has been shelved and is being reviewed by the Supreme Court.

The committee last December also directed PEMC to come up with a new price cap.

The panel’s March resolution noted that PEMC presented the results of a study last Jan. 27 and the committee, in a March 20 meeting, met to finalize the price. Officials, however, “determined that the existing timeline was insufficient for public consultation”.

The tripartite committee, formed on June 2, 2006, noted that its tasks involved the “coordination of efforts, monitoring of price volatilities and setting of market mitigation or preemptive measures to be implemented” in the WESM.

The extension of the price cap, PEMC President Melinda L. Ocampo yesterday said, does “not assure lower WESM prices this summer”.

“Prices in the WESM will continue to depend on the principle of demand and supply. Implementing the interim price cap was just a measure to address the high clearing prices.”

Higher WESM prices have been blamed for a P4.15/kWh rate hike that Meralco was supposed to start implementing last December. A P5.33/kWh increase was also sought for January but Meralco last week slashed this to P0.45/kWh after PEMC revised WESM prices for the December supply month. -- Claire-Ann Marie C. Feliciano source