The Independent Electricity Market Operator of the Philippines (IEMOP) warned that power supply in the Luzon Grid during the summer months might be as tight as last year since no additional power plants will come online during the first quarter of 2020.
“We see a similar scenario from 2019 during the summer months this year. Price spikes will occur because of tight supply… No new additional plants will come before summer so there are really threats of high spot prices,” Robinson Descanzo, IEMOP trading operations head and acting chief operating officer, said yesterday in a briefing in Pasig City.
Effective spot settlement price (ESSP) of electricity in April, May and June 2019 averaged at P8.18 per kilowatt hour (kWh), P7.15 per kWh and P8.38 per kWh, respectively.
Average ESSP for 2019 ended at P5.43 per kWh, a 47 percent jump compared to 2018’s 3.69 per kWh.
Descanzo said the primary cause of the growth in spot prices are thinning supply margins as available generation capacities are no longer sufficient to support the increasing demand as well as the heightened occurrences of scheduled and unforced maintenance outages and insufficient development of new generation capacities.
He said at present, the biggest power plant set to be operational this year is the 2×668 megawatts GN Power Dinginin coal plant in Bataan, whose first unit is expected to be operational by April and the second unit by the fourth quarter.
“It is ideal to accelerate the construction of GN Power Dinginin but there are also some small biomass and solar projects in development that we hope to already be available by summer,” Descanzo said.
“We also want unplanned outages of power plants to be corrected. We see some plants that are already conducting maintenance outages as early as January when demand is still low so we hope that there will already be minimal unexpected outages by summer,” he added.
Meanwhile, Descanzo defended the firm’s takeover of the operations of the wholesale electricity spot market (WESM) saying it has legal basis.
He said IEMOP is “banking on experience” in running a power spot market as no other local entity has experience in operating it.
Earlier this month, Puwersa ng Bayaning Atleta Representative Jericho Nograles questioned IEMOP’s qualifications and why it was selected as the operator of WESM.
The Department of Energy (DOE) also defended IEMOP citing that its creation was due to Department Circular 2018-01-0002 and the Independent Market Operator (IMO) Transition Plan which are based on the Electric Power Industry Reform Act (EPIRA).
The agency added a competitive selection process is not required in selecting WESM’s operator as this is only needed for foreign participants as an option under the EPIRA if the IMO was created in 2007.
The DOE also denied Nograles’ claim that IEMOP collects P0.50 for every kWh in a consumer’s monthly electric bill and said only P0.086 per kWh is collected, which the Energy Regulatory Commission approved to cover IEMOP’s budgetary requirements.
The Philippine Electricity Market Corp. also receives a share of these market fees as the WESM’s governance arm.
