March WESM settlement price drops to ₱2.47/kwh

Updated April 26, 2020, 9:48 AM By Myrna M. Velasco
https://business.mb.com.ph/2020/04/25/march-wesm-settlement-price-drops-to-%e2%82%b12-47kwh/

The effective settlement price in the Wholesale Electricity Spot Market (WESM) dropped to ₱2.47 per kilowatt hour (kwh) in March, which was 28.4-percent lower compared to the ₱3.45 per kwh in February.

WESM operator Independent Electricity Market Operator of the Philippines (IEMOP) said the plunge in the average power spot price had been due to the overall demand contraction in the last supply month because of the coronavirus-linked enhanced community quarantine (ECQ) that decimated economic activities in the country.

“The total energy and reserve requirements started to drop significantly as demand consumption from industrial facilities and commercial establishments tapered off at its onset,” the spot market operator said.

On the whole, it was noted that system demand in Luzon and Visayas grids went down by 19.8-percent or an average of 2,350 megawatts compared to pre-ECQ level.

IEMOP further noted there had been continued lower market prices until April 15 this year – which should have been the initial lapse of the ECQ enforcement. Then that was first extended until April 30; and subsequently stretched anew to May 15.

“For the first half of April, prices ranged from ₱0.0 per kWh to ₱2.973 per kWh as the total demand for the Luzon and Visayas grids averaged only at 9,541MW while generation supply averaged at an ample level of 13,911MW – over 4,300W supply margin,” the WESM operator said.

IEMOP similarly highlighted “a new trend in the demand profile was even observed wherein spot prices were mostly higher during the night as opposed to the afternoon.”

Essentially, it was indicated that “the lower spot market prices were reflected in the March 2020 billing period for the electricity volumes bought from WESM,” and it will be the same expectation for the April supply month when passed on in the electric bills this May.

“During the first half of April, spot market volume reduced to an estimated 10.98-percent of the total energy requirement most likely due to further reduction of energy consumption in the grid during the Holy Week,” IEMOP stressed.

The operating entity of the spot market qualified that prices will likely revert to uptrend once the ECQ is lifted; and when some portions of the Philippine economy will already re-open.