Electricity prices in the Wholesale Electricity Spot Market (WESM) jumped by 38.5 percent to an average of P7.79 per kilowatt hour (kWh) last month as supply margins thinned due to increasing demand and persistent power plant outages.
Independent Electricity Market Operator of the Philippines (IEMOP), the operator of WESM, said the systemwide average supply rose to 21,374 megawatts (MW), up 2.7 percent from April. Average demand also went up to 15,755 MW or by 9.4 percent from April.
This supply and demand levels resulted in a lower system supply margin, leading to the systemwide average price to rise to P7.79/kWh from P5.63/kWh.
‘The April prices were determined under the modified administered price [MAP] mechanism following the ERC [Energy Regulatory Commission]-imposed market suspension,’ Rica Cagnayo of IEMOP Trading Operations-Market Simulation and Analysis said during a press briefing on Wednesday.
The ERC declared a market suspension in response to the declaration of a State of National Energy Emergency. During this period, the MAP was applied, with coal price set at P6/kWh.
Meanwhile, regional supply-demand conditions showed mixed outcomes.
In Luzon, the relatively higher increase in demand (11,369 MW) compared to supply (15,509 MW) led to a decline in the supply margin, driven mainly by frequent planned and forced power plant outages, which prompted the issuance of grid alerts. As a result, Luzon WESM average prices surged by 24.8 percent to P7.02/kWh from P5.63/kWh.
Supply margins in the Visayas and Mindanao remain tight due to higher levels of generating unit outages and variations in electricity transfers between regions.
These conditions resulted in higher regional prices, with average market prices in Visayas soaring 81.4 percent to P10.20/kWh. In Mindanao, average WESM price stood at P9.28/kWh from P5.63/kWh.
IEMOP Vice President for Trading Operations Isidro E. Cacho Jr. said WESM average price could hit P9 per kWh if the yellow alert persists.
‘Yes, it’s possible in the next few weeks but as the rainy season starts we will see that our demand will decrease. However, the other contributing factor is the supply. As long as the big impact of forced outages is there, we might be seeing the same situation.’