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ERC extends cap on WESM to avoid higher electricity prices

By DANESSA O. RIVERA, GMA News

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The Energy Regulatory Commission (ERC) has extended by 45 days the implementation of a secondary price cap on electricity traded at the Wholesale Electricity Spot Market (WESM), which was supposed to expire on Wednesday, June 25.
 
In a June 16 resolution released Monday, ERC extended until August 9 the secondary cap amounting to P6.245 per kilowatt hour (kWh) from the original June 25 expiration.

"May problema pa sa supply, baka tumaas pa ang prices kaya in-issue ito ng ERC," ERC Executive Director Francis Saturnino Juan told GMA News Online.
 
The price cap is enforced once the threshold of P8.186 per kWh Generator Weighted Average Price or GWAP – based on a 72-hour  cycle – is breached.
 
On May 5, the ERC first issued the secondary price cap at WESM to prevent spikes in power rates for the month of May and June, and avoid what happened to the December 2013 billing.
 
 
 

Maintenance shutdowns

In the December billing, power distributor Manila Electric Company (Meralco) announced a record rate increase of P4.16 per kWh.
 
Meralco earlier claimed it was forced to buy expensive electricity from WESM, during the scheduled shutdown of the Malampaya gas-to-power facility, to meet the 2,700-megawatt deficit during the peak load demand of Luzon.
 
ERC sees the extension of the price ceiling fit, given the limited power supply due to the impending El Niño.
 
In a GMA News TV Live report, the Department of Science and Technology said El Niño is expected to commence in June 2014 and peak during the last quarter of 2014, but will last until the first quarter of 2015.
 
According to the National Grid Corporation of the Philippines, a number of power plants are scheduled to go on maintenance shutdown from June to December, the ERC noted in the resolution.
 
Expected to go on preventive maintenance shutdown are:
 
  • the 375 megawatt (MW) Unit 1 of Pagbilao plant from June 10 to July 9 


  • the 382 Unit 2 of Pagbilao plant from July 16 to August 14 


  • the 250 MW module 2 of Sta. Rita plant from September 6 to September 20


  •  the 647 MW Unit 1 of Sual power plant from September 12 to October 11


  • the 647 MW Unit 2 of Sual power plant from August 16 to September 14


  • the 250 MW module 40 of Sta. Rita plant from February 28 to December 31


  • the 250 MW module 50 of San Lorenzo plant from October 25 to October 29


  • the 250 MW module 50 of Sta. Rita plant from November 1 to November 5


  • the 250 MW module 60 of San Lorenzo plant from November 8 to November 12


  • the 350 MW Unit 2 of Malaya power plant from November 8 to December 23.
 
Within the 45 day period, ERC said it will hold a public consultation to get inputs from stakeholders whether the secondary price cap should be implemented permanently and if the threshold should be changed.
 
The regulator also directed the Philippine Electricity Market Corporation (PEMC) to submit "mitigating measures that may permanently be applied to the WESM, within 15 days from the effectivity of the resolution."

"The ERC reiterated its directive to PEMC to give a more permanent solution for price spikes," Juan said.
 
The PEMC was order in May to submit permanent mitigating measures but has yet to do so.
 
"We have not yet submitted as study is still ongoing and we were given 15 days to submit based on the latest ERC resolution," PEMC president Melinda Ocampo in a text message to GMA New Online. – VS, GMA News
Tags: energyregulatorycommission, wholesaleelectricityspotmarket, wesmpricecap, ercpricecap
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