ERC to review possible increase in WESM Secondary price cap


The Energy Regulatory Commission (ERC) is reviewing the appeal of generation companies (gencos) on the possibility of an increase in the secondary price cap (SPC) of the Wholesale Electricity Spot Market (WESM). 

In a report by the Manila Bulletin, ERC chairperson Monalisa Dimalanta said that the Philippine Independent Power Producers Association (PIPPA) filed a position paper on the secondary price cap. 

The current SCP is at Php 6.245 per kilowatt-hour (kWh) which will be enforced if settlement prices breach the Php9/kWh within a three-day rolling average. 

While there is no specific figure being discussed in the ERC, Dimalanta said that it is likely that the secondary price cap would adjust upwards. 

The ERC chief noted that the “WESM is there to send us price signals, but if we have the cap, signals are distorted.” It was also deemed as a disincentive to any planned injection of new capital into the generation segment of the power industry by investors. 

Dimalanta further stressed that for a couple of months in 2022, the SPC was triggered “more than 50% of the time – so that means, the signals we’re getting are not the right signals.” 

The ERC chairperson said that every time the SPC is triggered, it prevents GenCos from recovering. She added that the SPC does not show the real cost of generation, qualifying that the cost adjustment “is the one we are viewing.” 

The secondary price cap was first implemented around a decade ago primarily to protect consumers from the unwarranted increase in electricity prices, especially when the grids are struggling with tight supply.