ERC reviewing suspension of WESM secondary price cap

The Energy Regulatory Commission (ERC) is studying the appeal of power generation companies (gencos) to lift the Php6.245 per kilowatt-hour (kWh) secondary price cap (SPC) at the Wholesale Electricity Spot Market (WESM) amid soaring global oil prices. 

Based on a Manila Bulletin report, ERC Chairperson Agnes Devanadera met with gencos to discuss their appeal to temporarily lift the SPC. 

Gencos have contended that they would incur losses if the SPC is retained amid the continuous increase of coil, oil, and gas prices in the global market. They also say this would be counterproductive to the country’s bid for additional capital flow into the energy sector.

The Philippine Independent Power Producers Association (PIPPA) has noted that the country may experience an alarming increase in fuel costs caused by the ongoing crisis between Russia and Ukraine. 

PIPPA has been advocating for the removal of the SPC since 2014 to provide a proper price signal for additional investments in the energy sector. The group added that it only distorts the true cost of power and is not reflective of the sector’s real situation.

ERC Commissioner Florensida Digal said that the commission is reviewing the SPC even though it was only modified last year.

In June 2021, the ERC shortened the time threshold of the enforcement of the SPC to just three days or 72 hours from the original five days or 120 hours to prevent sustained spikes in the WESM.