The spike in Wholesale Electricity Spot Market (WESM) rates prompted the Independent Electricity Market Operator of the Philippines (IEMOP) to activate the secondary price cap, a price-mitigating mechanism designed to limit the increase in power prices.
“Starting May 4, the secondary price cap has been imposed up to May 7 and on May 20 to 22. If we sustain high prices in the spot market, we impose the secondary price cap to mitigate the increase in spot market prices,” said John Paul Grayda, IEMOP manager for pricing validation and analysis, during a press briefing on Thursday.
IEMOP, operator of WESM, noted an increasing demand trend as warmer temperature prevails throughout the country. It recorded an average P7.72 per kilowatt hour (kWh) in spot market prices during the said days as average demand increased from 10,120 MW from the previous month to 11,091 MW this May.
In April, the average price stood at P3.85 per kWh while peak demand hit 10,120MW.
IEMOP said the abrupt increase in demand was coupled by lower supply levels due to generator outages.
Given the sustained high prices, the secondary price cap of P6.245 per kWh was imposed on the said days this month. Grayda said it is possible that the secondary price cap could still be imposed in June or July.
IEMOP chief operating officer Robinson Descanzo said electricity demand started picking up since the year started at about 8,800MW. It reached 9000MW in February.
Sometime in March and April, the increase in consumption was tempered because of stricter quarantine imposition. However, demand went up in May.
“We saw a significant increase again in consumption. We reached again about 11,100 MW,” said Descanzo. As a result, he said WESM price is higher compared to the previous months.
“The estimated price for May is about P7.65 compared to the previous months. In terms of supply, supply last year is higher compared to what we have experienced in the first quarter of this year. The demand level is actually same or similar for the first few months but in the last two months in 2021 it is higher compared to last year.”
Likewise, IEMOP observed an increase in the volume of customer transactions for the first four months of the year which amounted to 25,129 GWh or an increase of 3 percent from the previous year’s 24,388 GWh.
Furthermore, generation from coal power plants continue to dominate the generation mix which totaled to around 13,885 GWh or 52.7 percent.
IEMOP said there are a total of 278 members (138 Generation Companies, 71 Electric Cooperatives, 49 Directly-Connected Customers, and 20 Private Distribution Utilities and Local Government Utilities) who are currently registered in the WESM.
As the Central Registration Body for Retail Competition and Open Access, IEMOP handles all the coordination with the 1,791 contestable customers, to date.
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