WESM power price cap lowered against sudden electricity hikes 

Regulators have moved to temporarily lower the price cap of power purchased at the wholesale electricity spot market (WESM) from P62 per kilowatt-hour to P32 per kilowatt-hour. This is in a bid to shield consumers from sudden spikes in electricity charges.

 

The new P32/kwh price cap, which will take effect immediately, will be in place until a new price ceiling has been issued within 90 days. 

 

The decision, which was released Friday, was based on the findings of the tripartite commission composed of the Department of Energy, the Energy Regulatory Commission (ERC) and Philippine Electricity Market Corp., (PEMC), which operates the WESM. 

 

WESM serves as the trading floor for for buyers and sellers of electricity. 

 

“It is understood that this new Offer Price Cap is interim in nature, while the WESM Design Study is on-going. The new and revised Offer Price Cap will be subjected to a public consultation and will be subject to the regular review and adjustments by the WESM Tripartite Committee,” the decision read.

 

The commission met on December 20 to discuss measures to address sudden spikes in power charges and prolonged price volatility.

 

It has directed PEMC to submit a study on its proposed price cap within 30 days from the issuance of the joint resolution. 

 

The implementation of lower price cap for electricity at the WESM comes at the heels of the Supreme Court’s issuance of a temporary restraining order (TRO)  Monday against the P4.15/kwh rate hike planned by Manila Electric Co. (Meralco), the Philippines' largest power distributor.

 

With the TRO, the Court prevented the ERC from implementing its December 9, 2013 directive that will allow Meralco to increase electricity rates by P4.15 per kilowatt hour in three tranches, from December 2013 to March 2014.

 

The P4.15-increase would have been divided into the said three tranches consisting of a P2 raise in December, P1 in February, and P0.44 in March, along with the corresponding taxes and service charges.

 

On Thursday, Meralco said it will abide by the Supreme Court’s ruling and maintain its generation charge at P5.67 per kilowatt hour. 

 

Meralco earlier claimed it was forced to buy expensive electricity from the WESM during the scheduled Malampaya shutdown just to meet the 2,700-megawatt deficit of the electricity peak load demand of Luzon. 

 

The Malampaya field fuels three power plants with a combined capacity of 2,700 megawatts or equivalent to 40 percent of Luzon’s power generation requirements.

 

The ERC has launched an investigation to determine if there was collusion among the power industry players to buy electricity from WESM at higher rates. — KDM, GMA News