February 10, 2020 | 12:01 am
THE Energy Regulatory Commission
(ERC) is in no rush to set a new secondary price cap that limits the spike in
energy prices at the wholesale electricity spot market (WESM), saying more
pressing matters needed faster resolution.
“In the order of things, ang dami
kasing pumasok na very urgent (several very urgent matters came in),” ERC
Chairperson and Chief Executive Officer Agnes VST Devandera told reporters last
week.
“Anyway, there’s one in place,” she
added.
The ERC’s stance comes months after
it asked market participants to submit until Nov. 4, 2019 their written
comments on a draft resolution proposing to lower the secondary price cap to
P4,502 per megawatt-hour (MWh) from P6,245/MWh to reflect current market
conditions.
In a draft resolution, the secondary
price cap will be imposed once the threshold 72-hour rolling generator weighted
average price, or GWAP, is breached.
Ms. Devandera said the ERC could not
say whether the draft would be issued in its final form in the first quarter or
the first half of the year.
“[There’s] one in place for summer.
For April or May meron pa naman ‘yung old cap (the old secondary cap is
still there,” she said.
The decision comes despite
expectations that power supply will be tight during the summer months. A
deficiency prompts electricity distribution utilities to source additional
supply from the spot market at prices higher than those pre-agreed in power
supply deals. The higher prices form part of the charges tucked into consumers’
monthly power bill.
In its draft resolution, the ERC
said the country continues to have tight power supply, which is worsened by
plant outages, thus leaving consumers vulnerable to high WESM prices.
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.
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 and interim
mitigating measure in the WESM to counter spikes in the market prices of
electricity.
On June 16, 2014 and Aug. 5, 2014, the
regulator extended the effectivity of the pre-emptive measure for a specified
period or until the creation of a permanent one, whichever comes earlier.
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. — Victor V. Saulon
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