PEMC welcomes probe on price manipulation

MANILA, Philippines - Philippine Electricity Market Corp. (PEMC) said it is open to any investigation on the alleged pricing manipulation at the country’s wholesale electricity spot market (WESM).

PEMC, created under the Electric Power Industry Reform Act (EPIRA) of 2001, is the operator of WESM.

PEMC president Melinda Ocampo said as what EPIRA envisions the WESM to be, “we will always be transparent.”

“We are always ready and we welcome any investigation,” she said.

Ocampo admitted there were pricing errors at the market but these would be subjected to a review by the Energy Regulatory Commission (ERC).

The Department of Energy (DOE) earlier said it would look into the alleged price manipulation at WESM.

Energy Secretary Angelo Reyes has called the PEMC’s attention to “validate the veracity of the facts mentioned by Albay Governor and former Presidential adviser on economic affairs Joey Salceda.”

Salceda alleged that electricity prices at the WESM, the trading floor of electricity, went up to as high as P68 per kilowatthour (kwh) from Feb. 11-13 due to power shortages caused by the El Niño weather disturbance.

But Ocampo said that there is a price cap in the market and would definitely not reach P68 per kwh.

Reyes said since the alleged price spikes were too high, he would ask PEMC to investigate.

“The P68 per kwh rate is too much and it’s something that we have to look at very, very urgently,” he said.

Reyes noted that the behavior of the market is dependent on power supply and demand. There were already warnings that prices of electricity will increase as power supply problems due to a prolonged El Niño phenomenon have yet to be resolved.

But Reyes assured Salceda and the public that if there was really “price manipulation” at the WESM, it will be dealt with accordingly.

“Price manipulation is a very serious offense and it is a public interest issue and we will deal very harshly against people charged with this in the electricity spot market,” he said.

Electricity prices at the WESM already rose 28 percent in January as an El Niño-induced dry spell curtailed hydropower generation.

Prices averaged P4.56 kwh in January compared with P3.56/kwh in December. WESM prices showed that from Feb. 18-22, prices went up to as high as P16 kwh.

“Insufficient energy offers were experienced in most of the trading intervals due to the high level of plant outages (scheduled maintenance and forced outages) coupled with limited hydroelectric plant capability. These conditions also resulted in high clearing prices in the market,” PEMC said in its latest report. 

In late 2007, the state agency Power Sector Assets and Liabilities Management Corp. (PSALM) became a subject of investigation by PEMC and by the ERC for allegedly being responsible for bringing the bid price in the WESM to a whopping P10/kwh.

The ERC eventually cleared the asset management firm of any involvement in the alleged price manipulation.