Power prices up in May as supply fails to keep up with demand

INQUIRER FILES

MANILA, Philippines — Electricity spot market prices showed a spike in May because the Visayas grid suffered thin power supplies, and nationwide rates are expected to balloon further following the powerful Mindanao quake.

Based on data from the Independent Electricity Market Operator of the Philippines (IEMOP), the systemwide rates climbed by 38.5 percent to P7.79 per kilowatt hour (kWh).

This, as demand jumped by 9.4 percent to 15,755 megawatts, while supply during the period inched up by just 2.7 percent.

IEMOP operates the Wholesale Electricity Spot Market (WESM), an avenue where power is traded between producers and distributors to boost their supply.

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With the tight power supply triggered by high electricity demand and forced power plant outages, the Visayas grid saw the sharpest increase in WESM rates among the main islands, soaring by 81.4 percent to P10.20 per kWh.

Mindanao likewise saw a significant rise in spot prices of 64.8 percent to P9.28 per kWh. Luzon, on the other hand, recorded a 24.8-percent increase to P7.02 per kWh.

“This reflects the impact of rising demand,” Isidro Cacho Jr., IEMOP vice president for trading operations, said in a media briefing.

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“However, there were also forced outages. This was very evident in the Visayas, where red and yellow alerts were issued, along with instances of manual load dropping (MLD). We saw that supply in the Visayas was thin, and this was reflected in market prices,” he added.

Asked if the average price of spot power prices across the country could hit P9 per kWh, the executive said this was possible if the supply woes in the Visayas grid continue.

The Visayas, heavily dependent on electricity imports from Luzon and Mindanao, has been repeatedly placed under yellow alert and red alert for the past weeks as major coal plants remained offline.

‘Very volatile’

Cacho described the supply situation in the Visayas region as “very volatile.”

Mindanao, meanwhile, was also put under yellow alert on Wednesday as the magnitude 7.8 earthquake hit large coal facilities.

Cacho noted that two major coal plants in Mindanao went offline following the earthquake. But he was hopeful that supply would improve with additional capacities coming in, coupled with the expected weaker demand during the rainy season.

“If the supply is addressed, the prices will go back to normal levels. There will be an ample margin to dampen market prices a bit,” he said. /cb