With favorable trading at the wholesale electricity spot market (WESM), power rates are expected to remain stable in the next few months due to the strong peso and higher utilization of hydroelectric power plants.
Philippine Electricity Market Corp. (PEMC) president Lasse A. Holopainen said he foresees WESM prices to stabilize at their current levels. PEMC is the operator of WESM.
Holopainen said they also expect the favorable weather to allow the higher utilization of hydropower facilities and lessen the use of cooling systems, resulting in lower demand for power.
“A couple of things, because its been fairly cold and the hydros have been running higher, the pricing in WESM is ok,” Holopainen said.
He added that the continuing peso appreciation will ease pressure on fuel importation costs on oil and coal.
For the month of February, electricity prices reached P3.38 per kilowatthour at the WESM.
Due to lower trading prices at WESM, Manila Electric Co. (Meralco), the country’s largest privately-owned power distributor, was able to reduce its rates by P23.29 centavos per kwh.
Meralco sources only about 10 percent of its power supply requirement from the WESM.
Holopainen, however, warned that the start of summer season “is always going to be a problem”.
He noted that historically, electricity prices start to go up during this period due to increase in demand and the decreased utilization of hydro facilities.
“But that’s the way the market is, there are times when prices are low and there are times when it is high. So if the weather holds its way then we’ll expect the same prices,” he said.
Designed to provide private entities with an efficient venue for trade and investment in the power industry, the WESM aims to provide incentives for the cost-efficient dispatch of power plants through an economic merit order, create reliable price signals to assist participants in weighing investment options, and protect a fair and level playing field for suppliers and buyers of electricity, wherein prices are driven by market forces.