ERC extends lower price cap at WESM

MANILA, Philippines - The Energy Regulatory Commission (ERC) has extended until February the lower price cap at the Wholesale Electricity Spot Market (WESM), the country’s trading floor for electricity.

“Pending the determination of a new WESM offer price cap which considers the permanent mitigating measures to be issued by the ERC, the interim WESM offer price cap of P32 per kwh set in the WESM Tripartite Committee joint resolution is hereby further extended for a period of 120 days from Oct. 24,” the ERC said in a resolution made public yesterday.

The ERC in December issued an order lowering the price cap at the spot market to P32 per kwh from P62 per kwh previously as a mitigating measure to avoid price spikes at the spot market as what happened in December 2013.

The price cap is the highest offer that power sellers can give when they sell their capacity.

The P32 per kwh price cap was supposed to be just temporary for 90 days from Dec. 27, 2013 but the ERC has extended three times until Oct. 24.

The latest extension, the fourth one, will be for 120 days from Oct. 24.

“The new level of WESM offer price cap shall be set in a manner that considers sustainable economic growth in the generation sector which promotes long term efficiency and security of the supply of electric power.

The new level of WESM offer shall be set in a manner that considers sustainable economic growth in the generation sector which promotes long term efficiency and security of the supply of electric power, the ERC said.

Efforts to improve operations at the WESM to avoid spikes in prices stemmed from the record increase in generation charge of Manila Electric Co. (Meralco), the country’s biggest power distributor, of P3.44 per kilowatt-hour in December 2013.

This, in turn, stemmed from the one-month maintenance shutdown of the Malampaya gas field, which supplies natural gas to three power plants in Luzon and from high prices at the WESM, where Meralco also sourced part of its power requirements.

Meralco officials attributed the high prices at the trading floor to tight supply because of emergency shutdowns of power plants.

The three plants sourcing power from Malampaya are the 1,200-MW Ilijan combined cycle natural gas plant owned by Kepco Philippines Corp. and the 1000-MW Sta. Rita and 500-MW San Lorenzo natural gas facilities owned by First Gen Corp. of the Lopez group.