The Energy Regulatory Commission (ERC) has suspended the Wholesale Electricity Spot Market (WESM) in Luzon and Visayas after a series of Red Alerts were issued in the past week due to an increase in demand as a result of high heat index.
In a statement, the System Operator (SO) announced on April 30, 2024 that WESM activities in Luzon and Visayas would cease during Red Alert periods.
“The Commission is working doubly hard to alleviate the impact of El Nino on our power system, and we are finding ways to mitigate the impact of the extremely high demand resulting from the high heat index as these ultimately affect our consumers,” said ERC Chairperson and CEO Monalisa C. Dimalanta.
Under Section 30 of Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001 (EPIRA), in the event of a natural disaster or an emergency involving national and international security, the ERC has the authority to declare a temporary WESM failure or to halt WESM operations.
ERC explained that during the market suspension period, the Administered Price would be activated. Additionally, if a dispatch interval is subject to both price mitigation measures like the Secondary Price Cap and the Administered Price, the lower of the two prices would be applied in the settlement of transactions for that interval.
Additionally, Section 2, Article I of ERC Resolution No. 12, Series of 2018 defined, “Natural Calamity” as an event or occurrence that was of natural causes, meaning circumstances that were beyond the control of man.
The red and yellow alert incident suggested that the power system’s condition was being impacted by the laid-out factors. Moreover, 103 cities and municipalities have already declared a State of Calamity due to the excessively high temperature.
With this, the Commission deemed these conditions as equal or comparable to that of a natural calamity.
When questioned if the suspension was too late, Dimalanta said that considerations needed to be applied before enforcing the suspension as investors might hesitate due to “meddling” of the operator in the market.
Meanwhile, the current demand scenario, according to the Independent Market Operator of the Philippines (IEMOP), had put an undue strain on available generation capacities, which prompted the National Grid Corporation of the Philippines (NGCP) to issue red and yellow Alerts.
To this call, IEMOP responded by stating that it would put the newly released ERC Order into effect. Additionally, the Market Operator (MO) expressed hope that supply levels would rise and the system would be able to function normally going forward.
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