ERC warns GenCos as WESM price surges

by Myrna Velasco – July 29, 2016

from Manila Bulletin

With scheduled and emergency shutdowns of power plants this week triggering yellow alert conditions, eagle-eyed Energy Regulatory Commission (ERC) has advanced warning to generation companies (GenCos) that it has been taking a close look at consequent price surges in the spot market.


ERC Chairman Jose Vicente B. Salazar stressed “we are aware of the situation and we have in fact noted price surges during the past few days.”

It was gathered that prices in the Wholesale Electricity Spot Market (WESM) had been hitting 7.00 per kilowatt-hour (kWh) on average this week; and peaked to P20 per kilowatt-hour as of Wednesday (July 27) with yellow alert condition in the Luzon grid.

Salazar noted “we have identified the plants that have gone on unscheduled outages and if this condition sustains for some time, we will look into the bidding patterns of these plants.”

The ERC has been trying to avert a situation reminiscent of when price spikes at the spot market hit hardly on consumers’ pockets during the so-called November-December 2013 “perfect storm” in the power industry.

That was the period when collusion raps had been thrown against the generation companies because of simultaneous shutdowns and outages of power plants that had driven price hikes of R4.00 to R5.000 per kilowatt- hour (kWh) in the case of major utility firm Manila Electric Company.

The ERC has just scheduled pre-trial hearings this August on the anti-competitive behavior cases lodged against various GenCos and that of the Manila Electric Company from the incidents three years ago.

On this week’s development of thin reserves-induced upward price swings, Salazar said  “we may look further into this if we find reason to believe that the players have taken advantage of the current supply deficit to drive up prices.”

He opined though that “with the secondary price cap in place, we may not see the prices reaching extraordinary levels.”

The power plants logged to have experienced emergency shutdowns this week include the Sual and Calaca coal-fired power plants.