Published
By Myrna M. Velasco
As settlement prices in
the Wholesale Electricity Spot Market (WESM) cognitively breached the secondary
price cap on Friday’s rotating blackouts, the next ‘painful blow’ on consumers
will be high electricity bills.
To hit the secondary
price cap in the spot market means the cumulative price threshold of P9.00 per
kilowatt hour (kWh) in the rolling generator weighted average price (GWAP) had
already been reached over the prescribed five-day period.
At an average rate of
P9.00 per kWh, that is roughly P4.00 per kWh higher than the P5.082 per kWh
average settlement price in the WESM in March supply month. Thus, market
intervention has to be enforced to trim the settlement price to the level of
P6.245 per kWh.
WESM operator
Independent Electricity Market Operator of the Philippines (IEMOP) has formally
informed industry participants as well as the Energy Regulatory Commission
(ERC) and the Department of Energy (DOE) on the “indicative imposition of the
secondary price cap on April 12” or the so-called Friday brownouts.
“For the immediate
trading interval following the breach of the cumulative price threshold (CPT),
the settlement price for each generating unit shall be capped at the rate of
P6,245 per megawatt hour,” IEMOP has stipulated.
It has to be noted that
on several trading hours on Friday, settlement prices have been hitting as high
as P26 per kWh and was even constantly transgressing the primary cap of P32 per
kWh.
IEMOP indicated market
intervention had been implemented on several trading intervals starting at
9:45am on Friday (April 12) – which was also the start of the rolling power
interruptions. A trading interval would refer to the one-hour duration of the
bid offers of generation companies (GenCos) in the spot market.
For the secondary cap,
IEMOP stated that this “shall continue until the rolling GWAP falls below the
cumulative price threshold,” which is the P9.00 per kWh reference point. The
GWAP refers to the average trading price that each participant-generator has
been reaching in their price offers in the market.
The market operator
expounded that “if the resulting market clearing price (MCP) is lower than the
price cap, the MCP shall be applied for the affected trading intervals.
It further emphasized
that “during the period when the price cap is imposed, oil-based plants are
entitled to recover additional compensation,” but subject to compliance to
prescribed requirements and rules. In spot market trading in energy, the oil
plants often serve the peaking needs of the electricity system – and oil-fired
power plant operators generally complain that with low spot price settlements,
their fuel costs cannot be fully recovered.
In the merit order of
dispatch, the oil plants are typically the last in the stack because they
usually have the most expensive price of power – albeit they serve a critical
purpose in the system especially when supply runs extremely tight.
No comments:
Post a Comment