Delays in coal deliveries to trigger power rate spikes

Updated May 8, 2020, 8:23 AM By Myrna M. Velasco
https://business.mb.com.ph/2020/05/07/delays-in-coal-deliveries-to-trigger-power-rate-spikes/

The operator of the Wholesale Electricity Spot Market (WESM) has sounded off that “restriction of supply” from coal plants may drive up electricity prices in the spot market in the coming days and weeks.

The Independent Electricity Market Operator of the Philippines (IEMOP) indicated there had been logistical obstructions in the delivery of coal fuel to power plants because of the coronavirus pandemic, primarily the implementation of the extended enhanced community quarantine (ECQ) in key areas of the country.

As indicated by affected industry players, the major sources of the country’s coal imports like Indonesia had also been severely battered by the coronavirus health plague, so there had been some snags in shipments; and that was compounded by clearing of shipments concern with the Bureau of Customs.

“With coal plants dominating the supply capacity mix in WESM, supply scenarios considering the restriction of coal generation by about 600 megawatts were simulated,” the spot market operator said.

IEMOP stressed “the restriction of supply from coal plants may be a result of logistical delays in the transportation and delivery delays of coal brought about by the ECQ.”

Given such handicap with the coal plants, the WESM operator emphasized that “power plants utilizing available indigenous fuel – such as geothermal, hydro and natural gas – will be maximized.”

It noted that “the result of the simulations indicates that supply will continue to be sufficient, however, increase in market prices were observed.”

Based on figures crunched by the WESM, spot market prices have the tendency to rise up to ₱6.68 per kilowatt-hour (kWh) when the ECQ is already lifted within May. That will be a significant increase from what was logged as average ₱2.47 per kWh settlement price in March.

Early on, the Department of Energy (DOE) has guaranteed that it will manage logistical impediments on fuel deliveries if this is within the country; but it cannot do as much from the overseas domain of the coal import sources.

The only assurance that the government sounded off so far is on adequacy of supply while Filipinos are confined in their homes during the ECQ period, but price swings may still be dictated by outcomes of trading in the spot market.

To ease the financial burden of the consumers, the DOE and the Energy Regulatory Commission (ERC) have also enforced installments of up to four months on the accrued electricity bills during the stay-at-home order enforced by the government.