WESM prices decline in Jan. as supply improves

ELECTRICITY PRICES at the Wholesale Electricity Spot Market (WESM) declined in January as supply margins improved, according to the Independent Electricity Market Operator of the Philippines (IEMOP).

IEMOP reported on Wednesday that the average WESM rate decreased 18.6% month on month to P3.56 per kilowatt-hour (kWh).

Between Dec. 26 and Jan. 25, the available power supply declined 5.3% month on month to 19,152 megawatts (MW). Demand, on the other hand, dipped 7.1% to 12,492 MW.

Tight supply margins on Luzon drove the average price to rise 9% year on year to P3.25 per kWh.

IEMOP said forced outages from coal and gas-fired plants on Luzon that took 4,811 MW out of commission, leading to the increased use of oil-based and other higher-cost sources.

Power supply decreased 8.3% month on month to 13,228 MW. Meanwhile, demand fell 8% to 8,574 MW.

“However, in the Visayas and Mindanao, prices dropped significantly, which is good news for WESM participants in the Visayas and Mindanao,” Isidro E. Cacho, Jr., IEMOP vice-president for trading operations, said in a briefing on Wednesday.

Spot prices in the Visayas plunged 41.2% month on month to P4.24 per kWh.

Available supply decreased 6.4% to 2,361 MW, while demand fell 5.9% to 1,861 MW.

On Mindanao, IEMOP reported a decline of 45.5% month on month to P4.27 per kWh, with supply increasing 8.4% to 3,563 MW and demand falling 3.8% to 2,056 MW. 

Coal-fired plants accounted for 58.7% of the market, followed by renewable energy with 27%, natural gas 13%, and oil-based generation 0.5%.

As the dry season approaches, Mr. Cacho is expecting improved supply with the entry of new renewable energy plants.

He also cited the extension of the supply contract that allows Manila Electric Co. to continue procuring power from a major gas-fired plant in Batangas, easing uncertainty about its sourcing.

“Hopefully, (the dry season) won’t be like what we experienced in 2024, when we had extreme heat that really caused demand to spike — so much so that we had numerous yellow alerts and red alerts,” he said.

IEMOP operates the WESM, where energy companies can purchase power when their long-term contracted power supply is insufficient for customer needs. —  Sheldeen Joy Talavera