GenCos push for discarding WESM secondary price cap

PEMC to begin transition of market operator for WESM

Generation companies (GenCos) have advocated for the elimination of the Php 6.245 per kilowatt hour (kWH) secondary price cap in the Wholesale Electricity Spot Market (WESM).

GenCos argued that the cap merely serves as a deterrent to attracting the desired influx of new capital into the power industry.

According to Manila Bulletin’s report, Philippine Independent Power Producers Association Inc. (PIPPA) President and Executive Director Anne Montelibano said that power firms have asked to scrap the secondary price cap (SPC) while suggesting that the primary offer cap of Php 32 per kWH will remain in place. 

Montelibano clarified that should the Energy Regulatory Commission (ERC) not be open to discarding the SPC, an alternative would be to raise the cap to align with the requirements of investors seeking sensible cost recoveries, based on the evolving developments in the industry.

She added that any adjustments to the SPC should consider the indices and the prices of fuel being used for power generation. 

Power industry players previously proposed increasing the SPC by Php 10 to Php 15 per kWh, citing spikes in global fuel prices from 2022 to 2023 as justification.

Currently, the SPC is triggered when the generator weighted average price (GWAP) within trading periods over three days or 864.5-minute intervals hits Php 9.00 per kWh.

Montelibano asserted that the revised secondary price cap must reflect market realities, advocating for an increase due to the antiquated nature of the current SPC.

On the potential impact on consumer bills, Montelibano explained that distribution utilities (DUs) like Manila Electric Company (MERALCO) can mitigate exposure to high spot market prices by securing sufficient supply contracts.