October 28, 2019 | 12:31 am
THE ENERGY
REGULATORY COMMISSION (ERC) is looking at a lower secondary price cap at the
Wholesale Electricity Spot Market (WESM) — which accounts for about a tenth of
the Manila Electric Co’s monthly supply — in a move to better minimize price
spikes.
The regulator is now
looking at P4,502 per megawatt-hour (MWh) from P6,245/MWh in order to reflect
current market conditions.
In a draft resolution,
which the ERC posted for industry feedback, the secondary price cap (SPC) will
be imposed once the threshold 72-hour rolling generator weighted average price
is breached.
The regulator noted
that the country continues to have tight power supply, which is worsened by
plant outages, thus leaving consumers vulnerable to high WESM prices. The price
cap limits price spikes in the market.
“WHEREAS, the
thresholds of the current SPC mechanism were determined and set based on market
data during the peak months of April-June 2010-2014, and as such, the premises
upon which the subject threshold were set are no longer reflective of a
relevant current conditions,” the ERC explained.
It said recent
developments in the electricity market “impelled the ERC” to review existing
threshold levels of the secondary price cap schemes and recalculate the same
based on market data using the period 2016-2018.
Sought for comment,
Victorio Mario A. Dimagiba, president of Laban Konsyumer Inc., said the group
supports “the least cost to the consumers.”
“That put the
generation plant to behave in the market at times of forced outages,” he said
in an online message.
But he said the ERC
should explain how it arrived at the new secondary price cap.
Mr. Dimagiba also said
that the Philippine Electricity Market Corp. (PEMC) and the Department of
Energy (DoE) should support the reduced price cap.
Under the draft
resolution, the commission recalculated the cumulative price threshold level to
P6,919/MWh equivalent to the generator weighted average price over a rolling
three-day period or 72-hour trading interval in the WESM. The previous threshold
was P8,186/MWh.
The ERC first imposed
the secondary price cap through a resolution issued on May 5, 2014 as an
urgent, interim mitigating measure in the WESM to counter spikes in electricity
prices there.
On June 16, 2014 and
Aug. 5, 2014, the regulator extended the effectivity of the preemptive measure
for a specified period or until the establishment of a permanent one, whichever
comes first.
On Dec. 15, 2014, it
made the measure permanent, thus putting a limit to the impact of extreme price
volatilities and excessive levels of prices in the WESM.
The ERC said it had
been directed by the Joint Congressional Power Commission after a hearing
earlier this year “to review and revisit” the SPC mechanism to determine the
reasonableness of the existing price cap. The hearing was called after the
recurring alert warnings on thinning reserve power from March to June 2019.
Market participants are
given until Nov. 4 to submit their written comments on the draft resolution. — Victor
V. Saulon
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