DOE plans power reserve market per grid

Energy reserves markets in Luzon, Visayas and Mindanao will be launched in March next year to keep power prices and availability stable amid growing demand for electricity, a government official said.

Energy Secretary Carlos Jericho L. Petilla told reporters, “The reserve market should be on a per grid basis. We’re studying that.” The model for the reserves market is not yet final, however, he explained.

“We really need a reserves market,” Petilla said. “We are doing this because, in 2015, the electricity supply might be tight. That doesn’t mean there will be outages; it’s just that the supply is tight so we need reserves in case there are [demand] spikes or something happens to one facility.”

The Department of Energy, the Energy Regulatory Commission (ERC) and the Philippine Electricity Market Corp. (PEMC), operator of the Wholesale Electricity Spot Market (WESM), are undertaking studies on what model would work best for the reserves market.

On the amount of power in the reserves market, Petilla said a total of 2000 MW may be made available. Presently, such reserves are not reflected in the WESM.

Asked whether a reserves market will not defeat the purpose of Sy-led National Grid Corporation of the Philippines (NGCP) in negotiating lower costs for reserves with power generating firms, Petilla said the company will actually benefit from having more choices on a day-ahead basis.

“If you actually put the reserves capacity on the market that means that the price [of each player] is dependent on the price of others. So we expect the prices to go down,” Petilla said. He added that NGCP would not be directly affected by the prices since transmission costs are passed on to consumers.

For still undisclosed reasons, the ERC has not approved a six-year-old proposal for a reserves market.

PEMC and NGCP recently filed applications with the ERC stressing the need to establish a reserves market.