WESM spot prices rise in March

PRICES on the Wholesale Electricity Spot Market (WESM) rose in March, with Luzon experiencing a surge of over 50% due to eroding supply margins, according to the Independent Electricity Market Operator of the Philippines (IEMOP).

The IEMOP reported that the average WESM price rose 23% month on month to P4.31 per kilowatt-hour (kWh).

There was a “slight decrease in the overall system supply and an increase in the system demand,” Arjon B. Valencia, manager for corporate planning and communications at IEMOP, said at a briefing on Wednesday.

Between Feb. 26 and March 25, the available supply decreased 1.3% to 14,103 megawatts (MW). Demand increased 4.7% to 13,383 MW.

Luzon was the only region posting increase, with spot prices rising 52.5% to P4.10 per kWh, following forced plant outages that dried up supply, which fell 1.3% to 14,103 MW. Demand rose 4.7% to 9,016 MW.

WESM prices in the Visayas declined 5.4% month on month to P5.08 per kWh.

Supply rose 10.4% to 2,492 MW, outpacing the 3% increase to 1,885 MW in demand.

Despite the decline in the Mindanao supply of 3.8% to 3,318 MW, imports of electricity from other grids led to a lower spot price average of P4.43 per kWh, against P5.25 per kWh a month earlier.

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

The market operator previously projected WESM prices to climb to as high as P9 per kWh as a result of the Middle East conflict.

Isidro E. Cacho, Jr., IEMOP vice-president for trading operations, said the potential increase had been mitigated by the WESM suspension and the modified administered pricing mechanism implemented by the Energy Regulatory Commission on March 26.

“I think it’s a very good policy action from our regulator and policymakers to help avert issues and essentially stabilize market prices, which will eventually be reflected in the price we see on our electricity bills,” Mr. Cacho said.

In a statement, the Energy Regulatory Commission (ERC) said the modified administered pricing will remain in effect until its lifts the WESM suspension.

Under the modified administered pricing mechanism, prices will be based on prevailing fuel costs, replacing the use of historical market prices that do not reflect current conditions marked by geopolitical tensions and fuel supply constraints.

“We will continue to closely monitor market conditions and implement timely measures to protect consumers while ensuring the stability and adequacy of our power supply,” ERC Chairman and Chief Executive Officer Francis Saturnino C. Juan said. — Sheldeen Joy Talavera