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.
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