Power plant outages push up WESM prices

The average price at the Wholesale Electricity Spot Market (WESM) in January rose by 9 percent against the previous rate in December primarily due to forced and planned outages of major plants, the Independent Electricity Market Operation of the Philippines (Iemop) said.

In a press briefing on Friday, Iemop, which manages the WESM, said these were exacerbated by the drastic drop in supply brought by significant outages caused by Typhoon “Odette.”

As of Jan. 25, spot prices were at an average of P6.98 per kilowatt-hour (kWh) from last month’s average of P6.43 per kWh. WESM prices influence how much consumers pay for their electric bills, as the facility is considered as electricity distributors’ go-to marketplace to supplement their primary supply and is one of several components that are factored in electricity rates.

The WESM scheme was also temporarily suspended in the Visayas following the onslaught of Odette due to power system disturbances. The suspension was eventually lifted except in Bohol where restoration efforts remain underway, allowing the Visayas to resume exporting power to Luzon.

Based on Iemop data, supply and demand during the period decreased on a month-on-month basis. John Paul Grayda, Iemop manager for pricing and validation analysis, said demand traditionally goes down following the holiday season and then peaks during the summer period.

Both the National Grid Corp. of the Philippines and the Department of Energy (DOE) earlier warned that there may be instances of yellow and red alerts during the summer if maintenance schedules of power plants would not be strictly followed and power demand would not be managed.

A yellow alert declaration means an area is experiencing low electricity supply, while a red alert means there is insufficient power supply in the grid that could lead to rotational brownouts.

Grayda reported that the next two months would see the bulk of maintenance activities for power plants to avoid outages in the summer, especially with the presidential elections happening in May.

Simulations conducted by Iemop that were based on the DOE’s forecast report showed that there would be adequate power supply in the Visayas and Mindanao.

As for Luzon, alert warnings could be inevitable if the existing power plants would not be able to deliver their committed supply.

Robinson Descanzo, COO of Iemop, said the additional new committed capacities this year, which include GNPower’s Dinginin coal-fired power plant with an installed capacity of 668 megawatts and San Miguel Corp.’s coal-fired power plant in Bataan with a capacity of 150 MW will not operate until June.