Lower demand pulls down electricity spot market prices

MANILA  -A decline in demand amid the rainy season pulled down the spot market prices of electricity in June until the first half of July in the Luzon and Visayas grids to P6.07 per kilowatt-hour (kWh) from P6.67 per kWh, the Independent Electricity Market Operator of the Philippines (Iemop) said on Wednesday.

Iemop said market data in July revealed a decrease of 155 megawatts (MW) in average electricity demand for the two island groups, or a drop to 11,486 MW from 11,641 MW in June.

Supply, meanwhile, stood at 14,858 MW, leaving a supply margin of 2,935 MW, up from 2,909 MW in the previous month.

“Our supply margin is stable so hopefully that continues, then we can possibly see lower spot market prices … There are improvements in terms of the outages and plant performance so hopefully these continue,” Iemop head of corporate strategy and communications Isidro Cacho told reporters.

Power distributors such as Manila Electric Co. (Meralco) buy power from the Wholesale Electricity Spot Market (WESM), whose prices can be volatile depending on demand.

Cacho added that the downtrend in WESM prices might continue if there would be no unforeseen plant outages in the coming months, even as the El Niño weather phenomenon was expected to be at its worst in the latter part of the year.

Last week, National Grid Corp. of the Philippines (NGCP) raised a yellow alert status in the power-hungry Luzon grid after a transmission line tripped in a natural gas-fired plant in Batangas province.

This affected at least half a million power consumers in Metro Manila and nearby provinces.

A yellow alert is issued when the operating margin is not enough to meet the transmission grid’s regulatory and contingency requirements.

Despite the threat of El Niño—characterized by drier than normal conditions—Cacho remained optimistic that this would not affect the operations of hydro power plants, citing heavy rainfall in the past week that increased dam elevation.

“Again, the factors that could affect the [spot market] prices are always the plant outages. Other than that, I don’t think there’s a major issue,” Cacho said when asked whether there would be any hikes in prices.

The Iemop official also placed his bets on NGCP’s new transmission line projects that were expected to come online in the fourth quarter of the year to ease spot market prices.

Last month, WESM prices slipped below the P8 level at P7.10 per kWh thanks to the reopening of the 1,200-MW Ilijan gas-fired power plant.