Effective settlement spot prices (ESSPs) in the wholesale electricity spot market (WESM) dropped to a six-year low in January with P1.90 per kilowatt-hour (kWh), the lowest since 2011, according to the Philippine Electricity Market Corp. (PEMC).
PEMC said the low rates resulted in more customer confidence. Buyers purchased an average of six to seven percent of their requirements from WESM.
ESSPs are the average prices paid by the wholesale customers for energy purchased from the spot market.
Electricity customers also secured 23 percent of their requirements from WESM. This is the highest exposure of customers since December 2006, PEMC said.
“The result [of the drop in prices] is how much was bought at the market, that’s the highest spot quantity…We believe that shows competitive pricing being given by WESM,” PEMC corporate planning division manager Isidro Cacho said.
Data showed that for the past three years, WESM prices have been declining, from P5.58 per kWh in 2014, P4.46 per kWh in 2015, and P3.33 per kWh in 2016.
The decline was because of notable market reforms and developments that ushered in transparency and competition in the electric power industry, Cacho said.
He added that mitigating measures in place address price spikes such as lowering of offer price cap from P62,000.00 per megawatt-hour to P32,000.00 per MWh and the imposition of secondary price cap mechanism.
PEMC also has complied in changing the market rules to reflect the preferential status for emerging renewable energy resources as mandated by the Renewable Energy Act of 2008.
It said that registered capacity of preferential dispatch resources in the WESM totals to 1, 356.6 megawatts (MW).
Preference in the dispatch of emerging renewable energy resources has been implemented with solar, wind and run of river hydro sources named as must dispatch generating units while FIT-entitled biomass is accorded priority dispatch generating units.
“The WESM has been an aid to the economic growth of the country and developments in the electric power industry. More than the competition, supply augmentation, investment simulation, and advancements that the WESM has contributed in nation-building, the WESM boasts years of integrity through transparency,” PEMC president Melinda Ocampo said.