The Energy Regulatory Commission (ERC) is considering adjustments in the secondary price caps at the wholesale electricity spot market (WESM) to recognize the increase in coal and fuel prices.
An undated draft resolution showed the ERC will increase the cumulative price threshold of the caps at P10,222 per megawatt hour (MWh) from the current P9,000 per MWh, citing a recalculation that was made by the regulatory body.
However, the secondary price caps will remain at a ceiling of P6,245 per MWh if generator weighted average prices over a rolling three-day period or 72 hourly trading intervals in the WESM hits the P10,222 per MWh rate.
The ERC plans to implement the adjustment in the entire country and will also allow power plants to apply for additional compensation subject to validation and approval.
The secondary price cap is being implemented to protect consumers from sustained high power rates with WESM’s inherent volatile market movements.
However, the business sector believes the mechanism should be removed if not suspended or adjusted, if the government wants to encourage investors to build additional power plants.
Developers argue the price cap lessens investors’ interest to join the local power sector as the mechanism “distorts the true cost and is not reflective of the real situation of the energy sector.” – Jed Macapagal
