WESM price tweaks prevented higher utility charges, says Meralco

July 15, 2020 | 12:01 am

https://www.bworldonline.com/wesm-price-tweaks-prevented-higher-utility-charges-says-meralco/

MANILA ELECTRIC CO. (Meralco) welcomed the Supreme Court’s ruling which affirmed the Energy Regulatory Commission’s (ERC) order adjusting the spot market prices in two supply months in 2006, relieving consumers of paying additional P6 per kilowatt-hour (kWh) for generation charges.

In June, the high court released a resolution upholding the regulator’s police power when it enforced price controls at the Wholesale Electricity Spot Market (WESM) upon learning the unusual price movements during its third and fourth month of operations.

According to Meralco, WESM prices reached as much as P4,903 per megawatt-hour (MWh) and P7,218/MWh in September and October of that year, respectively.

It was the distribution utility that asked the Philippine Electricity Market Corp. (PEMC), then-WESM operator, to probe such movements.

Later, it was found that the price spike was due to some market participants who have behaved anti-competitively and have abused market power. This led the ERC to come up with the order setting the WESM settlement prices at the TOU (time-of-use) rate by the National Power Corp. to prevent consumers from being charged for an “unreasonable” price.

“This resolution is a welcome relief to the consumers, especially at this time of pandemic, as there would be no additional burden to consumers,” Meralco Head of Regulatory Management Jose Ronald V. Valles said in a statement on Tuesday.

“If the WESM prices were not adjusted, this would have translated to an increase in the generation charge of its consumers of about 90 centavos and P2.05 per kilowatt-hour for the supply months of September and October, 2006, respectively which we will be passed on to consumers,” he added.

The Court of Appeals (CA) in 2009 affirmed the ERC’s role in adjusting the WESM prices. Later, the state-led Power Sector Assets and Liabilities Management Corp. (PSALM) sought the reversal of the CA ruling in a petition filed with the high court.

The Supreme Court then agreed that the ERC exercised its investigative and quasi-judicial powers under the Electric Power Industry Reform Act (EPIRA) in imposing the substitute rates which did not only protect consumers but also corrected the “unusually high and unreasonable” market prices.

“The Supreme Court’s ruling is very much appreciated as it confirms and validates the efforts of ERC in protecting the consumers as they are affected by the rates,” ERC Chairperson and Chief Executive Officer Agnes VST Devanadera said last month. — Adam J. Ang