By:
Daxim L. Lucas - 12:13 AM December 20, 2016
The wholesale price of
electricity hit a five-year low last November, thanks mainly to the combined
effects of a surplus in generated power supply and cooler yearend temperatures
that temper the need for air-conditioning, according to the operator of the
country’s electricity exchange.
In a statement, the
Philippine Electricity Market Corp. said the effective settlement spot prices
(ESSPs) on the wholesale electricity spot market (WESM) fell to P2.27 a
kilowatt-hour (kWh) for the November 2016 billing period—the lowest since
January 2011. ESSPs refer to the average price paid by wholesale customers for
electricity bought from the spot market.
“Such a sharp decline
in market prices is welcome as long as wholesale customers like distribution
utilities pass on the historically low market prices to their end-users,” PEMC
president Melinda Ocampo said. “The decrease in WESM prices was driven by
higher energy volume offers in the market and colder temperature.”
According to the PEMC
chief, wholesale customers sourced 19 percent of their power supply
requirements in the spot market during the November 2016 billing month, which
also represented the highest volume since March 2009.
PEMC data showed that
the so-called generation mix remained heavily skewed toward coal-powered
generation plants, which accounted for 47.42 percent of all electricity traded
on WESM in November 2016. Renewable energy resources—including large hydropower
and geothermal sources—contributed 26.25 percent to the total during the month.
PEMC, whose existence
had, in the past, been criticized for failing to deliver on the promise of
cheaper electricity prices, took the opportunity to stress that market forces
were working as promised to deliver more affordable electricity to consumers.
“The recent
developments in the electricity market underpin PEMC’s efforts in establishing
a competitive, efficient, transparent and reliable market where prices are
governed as practicable by commercial and market forces,” Ocampo said. “The
coming year will also see PEMC’s involvement in the full implementation of
retail competition and the establishment of WESM in Mindanao.”
PEMC is a non-stock,
non-profit corporation incorporated in November 2003 upon the initiative of the
Department of Energy with representatives from the various sectors of the
electric power industry to be the governance arm of WESM.
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
scheme into WESM.
WESM is a centralized
venue for buyers and sellers to trade electricity as a commodity where its
prices are based on actual use and availability.
The electricity spot
market was created by Republic Act 9136, or the Electric Power Industry Reform
Act (Epira) 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 and competition.
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