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Tweaks in WESM rules proposed to avoid electricity bill shock

InterAksyon.com means BUSINESS

MANILA - The government is mulling over changes to the Wholesale Electricity Spot Market's (WESM) rules to prevent a repeat of the recent spike in power rates.

Energy Secretary Carlos Jericho L. Petilla last night told reporter that among the proposed changes are a lower price cap and authority for the Department of Energy (DOE) chief to set prices during times of tight electricity supply.

"It is a learning experience that we have to tweak rules. Rules are dynamic, they always change to make it more acceptable to the public," he said.

Distributors like Manila Electric Co (Meralco) buy additional supply from WESM whenever demand is higher than what the utility contracted from power plant operators. WESM is a trading platform where power plant operators sell excess output.

Under WESM rules, power suppliers with the lowest price offer gets first dibs on electricity purchases. However, the price paid is based on the last offer made to meet the demand. Be that as it may, power plant operators are barred from pricing their supply above P62 per kWh at the WESM.

The bulk of Meralco's record P3.44 per kilowatt-hour (kWh) increase in the generation charge this month stemmed from purchases in the spot market. The utility bought more electricity from the WESM after maintenance and repair works on its contracted power plants cut down its supply.

The Supreme Court has since barred Meralco from imposing the record increase in rates this month even after the utility proposed to stagger collection of the same.

Petilla said the DOE has proposed to lower the price cap to P32 per kWh, but the final amount would depend on the findings of a tripartite commission composed of the department, the Energy Regulatory Commission and Philippine Electricity Market Corp (PEMC), which operates WESM.

The tripartite body is investigating an alleged collusion among power suppliers to jack up rates at the WESM amid the tight supply brought about by the confluence of a scheduled maintenance of the Malampaya natural gas platform and unscheduled repairs by some power plant operators.

The Malampaya supplies 40 percent of the Luzon grid’s electricity requirements.

Besides the price ceiling, Petilla said DOE is proposing that the department chief be given the authority to cap prices based on the previous 30-day trading range whenever the grid is tight on supply.

He said such market intervention is already included in WESM's rules but only applies when demand exceeds supply, and the grid is forced to run reserves or back-up power generation.

"But last spike hinde lumagpas demand sa supply; reserves were not used," Petilla said.

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