Dec. wholesale electricity prices hit record low

Effective settlement spot prices (ESSPs) in the wholesale electricity spot market (WESM) declined to P2.28 per kilowatt hour for the December 2016 billing period. It was the lowest since January 2011.

ESSPs refer to the average prices paid by wholesale customers for energy purchased from the spot market. December’s ESSP is the lowest since January 2011.

Distribution utilities and customers directly withdrawing from the grid got 21 percent of their requirements from the electricity bourse.

Meralco, the largest distribution utility in the country, procured 21.96 percent of its supply from WESM, benefiting from the low prices.

“Prices in the market are result of commercial forces,” Philippine Electricity Market Corp. (PEMC) president Melinda Ocampo said in a statement. “These market prices send signals to investors to make sound investment decisions on the timing of installation, capacity and type of resources. We see that WESM plays a pivotal role in a liberalized and deregulated market environment.”

For the December 2016 billing period, coal accounted for 45.5 percent of the electricity generated in the Luzon and Visayas grids. There is a slight increase from the output of geothermal resources at 13.9 percent and wind resources at 2.8 percent. The chart below shows the generation mix of the December 2016 billing period.

“As we reap the benefits of a working WESM, we are preparing for the full implementation of retail competition where hopefully the efficiencies in electricity trading will redound to the benefit of contestable customers,” Ocampo said.