WESM price cap up for review

MANILA, Philippines - The price caps imposed on the Wholesale Electricity Spot Market (WESM) have been made permanent, but would reviewed regularly to prevent another round of price spikes.

The WESM Tripartite Committee decided to maintain the P32 per kilowatt-hour (kwh) price ceiling and the secondary price cap of P6.245 per kWh, Philippine Electricity Market Corp. (PEMC) president Melinda Ocampo said.

The WESM Tripartite Committee is composed of the Energy department, the energy Regulatory Commission (ERC) and the PEMC.

“Actually, the price caps were made permanent, but there is a colatilla that there will be a continuing review. There is a provision that there will be a review so depending on the situation, they will study it,” Ocampo said.

The review would mainly be focused if the secondary cap and the P32 per kwh caps are sufficient and would depend on the revenue of the investors, she noted.

The price cap is the highest offer that sellers could give when they sell their electricity to the market.

These price caps were imposed by the ERC in 2014, after prices at the WESM soared by P4.16 per kwh in December 2013 due to the month-long Malampaya natural gas field shutdown in late 2013.

Originally at P62 per kwh, the WESM price ceiling had been reduced to P32 per kwh. Meanwhile, the power regulator also put in place in May 2014 a secondary price cap at the spot market to cushion consumers from possible power rate hikes.

These price ceilings were supposed to have ended last September but was extended to get comments from industry players for the planned implementation of a new cap.

In August 2015, the ERC said it is studying the implementation of a single market threshold on the electricity spot market aimed to protect consumers from sudden electricity rate spikes and at the same time ensure returns to investors, replacing the WESM threshold and the secondary cap.