Average electricity prices in the Wholesale Electricity Spot Market (WESM) began going down in June due to more stable supply and lower power demand, according to the Independent Electricity Market Operator of the Philippines (IEMOP).
From June 1 to 20, the average price dropped to Php6.53 per kilowatt-hour (kWh) from Php7.66/kWh in May.
IEMOP, which operates WESM, said that it observed a decreased demand and a slight improvement in supply in the first 20 days of the month, which then reflected a decrease in spot market prices.
IEMOP Manager for Pricing Validation and Analysis John Paul Grayda noted that during the start of the rainy season in June, the weekly demand decreased from 11,500 megawatts (MW) from May 23-29, to 11,200MW from May 30-June 5, and 10,600MW from June 6-13 before going up to 10,900MW the following week.
Data from IEMOP showed that average electricity from June 6-12 was at Php3.84/kWh. This is lower than the Php7.88/kWh rate posted from May 30-June 5. Meanwhile, average electricity prices went up to Php6.08/kWh from June 13-20, but still lower than Php9.55/kWh from May 23-29 and Php8.56/kWh from May 16-22. ‘
The downtrend is expected to continue for the remainder of June since the Effective Spot Settlement Price (ESSP), an effective rate paid by customers for their respective WESM transactions for each billing month, is expected to be lower than Php8.31/kWh recorded in May. IEMOP reported that the ESSP in May was over twice the April ESSP of Php4.04/kWh.
Last month’s supply was greatly affected by outages and deratings of power plants, which reached 2,396MW and 4,984MW, respectively. These contributed to the Yellow Alerts in the Luzon Grid in May and the Red Alerts leading to the rotating brownouts from May 31-June 2.
Market interventions were also called for several intervals by the National Grid Corporation of the Philippines because of manual load dropping which resulted in generation deficiency. With the tight supply condition, the secondary price cap (SPC) was implemented as the average price breached the Php9/kWh threshold.
The SPC was designed to limit high prices in the spot market. IEMOP imposes the cap when it notices that prices are high for the past five days. Market operator officials also said the lower WESM average prices in the early weeks of June were also due to the imposition of the SPC.
Grayda said that the SPC was implemented during 103 trading intervals from June 1-20.
The Department of Energy said the SPC will allow the market operator to limit prices in the market at Php6.245kWh as protection to customers.
Photo courtesy of IEMOP website.