What’s appropriate WESM cap?

AFP FILE PHOTO

MANILA, Philippines—The Philippine Electricity Market Corp. (PEMC) announced Monday it would complete this month a study on the “appropriate” price cap in the Wholesale Electricity Spot Market (WESM).

The cap refers to the highest possible price that can be offered by power generation firms trading excess capacity in the WESM. It is one of the factors linked to the record P4.15-per-kilowatt-hour increase in power rates in December.

The Supreme Court has issued a temporary restraining order on the increase by the Manila Electric Co. (Meralco) following opposition by party-list groups.

“We were given one month to complete the study so we will do it as directed,” said PEMC president Melinda Ocampo in a text message. PEMC operates the WESM.

Regulators last month temporarily set a lower price cap on electricity spot market supply trades (P32,000 per megawatt-hour, or P32 per kWh from the existing P62,000/MWh or P62/kWh) while further studies were conducted to prevent future rate spikes.

The ceiling will be in effect until the issuance of a new offer price cap “not later than 90 days” from the issuance of the joint resolution signed Dec. 27. The Energy Regulatory Commission gave PEMC 30 days to submit a study on the “appropriate” offer price cap within 30 days from the issuance of the resolution.

The WESM is designed to allow Meralco and others to get additional supply whenever electricity demand is higher than on the distribution utility contracted from power plant operators.

Ocampo also said PEMC would cooperate with the Supreme Court on the inclusion of the PEMC as a “necessary party” to the petitions filed against the P4.15/kWh power generation rate hike that Meralco had planned starting last month.

Meralco said the increase was prompted by tight power supply and expensive alternative fuels during the maintenance shutdown of the Malampaya gas platform from Nov. 11 to Dec. 10 last year.