Higher power rates loom in April on higher WESM costs

Electricity consumers across Luzon, the Visayas, and Mindanao should brace for higher bills this month due to an increase in spot market prices resulting from lower supply seen last month.

In a statement on Wednesday, the Independent Electricity Market Operator of the Philippines (IEMOP)—the private operator of the Wholesale Electricity Spot Market (WESM)—said tighter supply margins seen in March resulted in a systemwide average market price increase of 23%, rising to P4.31 per kilowatt-hour (kWh) from P3.50 per kWh in February.

In Luzon alone, the average market price increased to P4.10 per kWh, up 52.5% from P2.69 per kWh in the previous billing month as average demand increased by 428 megawatts (MW) while average supply slightly decreased by 184 MW, "resulting in a supply margin decline of 576 MW, primarily due to higher and more frequent planned and forced outages.”

IEMOP added that, alongside Luzon, supply margins in the Visayas and Mindanao declined by 8 MW and 46 MW, respectively, “due to higher outage levels and variations in HVDC (higher voltage direct current) flows.”

Supply margin refers to the excess capacity —difference between total supply and demand plus required reserves— available to ensure grid reliability.

The Visayas grid, however, saw a 236 MW increase in supply which led to a slightly lower average market price of P5.08 per kWh from P5.37 per kWh.

For Mindanao, the higher HVDC import and only a slight decrease in margin resulted in a lower average market price of P4.43 per kWh from P5.35 per kWh.

WESM prices may directly result in higher electricity bills due to higher generation charges passed on by distribution utilities or electric cooperatives to their end-consumers. — RSJ, GMA News