WESM participants not included in mandated rate reduction scheme

Wholesale Electricity Spot Market (WESM) participants are not included in the mandated rate reduction (MRR) scheme.

Energy Regulatory Commission (ERC) chairman Rodolfo B. Albano Jr. explained that prices of electricity at the WESM are not regulated by the National Power Corp. (Napocor) as these are determined by market forces through trading.

Napocor rates must first be approved by the ERC while the WESM rates are private and market-driven.

"The imposition of the MRR will distort the price of Napocor in the spot market which will affect competition in the market," Albano said.

Meanwhile, the impending adjustment in power rates to be effected in September is merely a recovery of the adjusted costs of the Napocor due to changes in the price of fuel and fluctuations in foreign exchange.

Napocor is authorized to recover or return to its customers and should not be mistaken as rate increases," Albano clarified.

The implemenation rules for the recovery of fuel and independent power producer (IPP) costs, generation rate adjustment mechanism (GRAM) and incremental currency exchange rate adjustment (ICERA) issued by the ERC "allow the recovery of eligible costs from Napocor’s customers, particularly the costs associated to produce electricity and the monetary advances to defray the cost of foreign currency exchanges adjustments."

"The power utilities should have no gain or loss in the implementation of the said mechanisms, as they should only recover the actual amount due them," Albano added.