By
Lenie Lectura - February 1, 2017
THE Energy Regulatory
Commission (ERC) is currently evaluating if there is a need to adjust the price
ceiling on power traded at the spot market.
This, after the energy
department raised the possibility of further lowering the secondary price cap
at the Wholesale Electricity Spot Market (WESM), the country’s electricity
trading floor.
“We are reviewing how
to lower the secondary price cap in the WESM with the ERC,” Energy
Undersecretary Felix William Fuentebella said last month.
The price cap is the
highest offer that sellers could give when they sell their electricity to the
market.
When sought for
comment, ERC Spokesman lawyer Rexie Digal said there is an ongoing review on
the price cap, including the primary cap set at P32 per kilowatt-hour (kWh).
“Given that the present
offer price cap and secondary price cap were determined based on 2014 data, the
commission is already in the process of reviewing these levels using the most
recent available input parameters and update them if necessary,” Digal said in
a text message.
Price spike control
WESM’s primary
offer cap was lowered to P32/kWh from P62/kWh in a bid to prevent
excessive price spikes. It can be recalled that WESM prices soared
by P4.16/kWh in December 2013, as a result of the Malampaya natural
gas-field shutdown.
The Manila Electric Co.
(Meralco), which sources bulk of its power requirements from the gas facility,
announced to implement record-high price increase.
These rates include the
P0.45/kWh deferred increase for January 2014 billing period that Meralco wanted
to collect over a six-month period. An earlier P4.15/kWh rate hike was also set
to have been implemented in phases starting in December 2013, but was stopped
by the Supreme Court.
The ERC has yet to
release the result of its investigation into the possible collusion or abuse of
power allegedly committed by industry players, which resulted in an exorbitant
rate hike in history yet.
Besides the primary
cap, the ERC also ordered the implementation of a secondary cap to further
protect consumers from excessive price spikes triggered by supply tightening.
Called the price
threshold mechanism, the P6.245/kWh secondary cap kicks in the market once an
average threshold of P9/kWh is reached over a 168-hour period.
Colatilla
“Actually, the price
caps were made permanent, but there is a colatilla that there will be a
continuing review. There is a provision that there will be a review, so,
depending on the situation, they will study it,” Philippine Electricity Market
Corp. President Melinda Ocampo had said. PEMC is the WESM operator.
Ocampo added that the
Malampaya shutdown this year would not lead to a repeat of the 2013 incident,
because existing mitigating measures are now put in place to prevent abnormal
price spikes.
“There is a threshold
that will prevent higher WESM prices,” she said
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