Secondary cap mitigates power price spike impact at WESM

by Myrna Velasco – August 3, 2016

from Manila Bulletin

Electricity consumers have been saved to a certain extent by the secondary cap of the Wholesale Electricity Spot Market (WESM) so they will not be burdened as much with the impact of spot price spikes in their bills in the coming month.

WESM operator Philippine Electricity Market Corporation (PEMC) indicated that “price surges” happened on the patchy days of yellow and red alert conditions or the extreme thinning of reserves in the power system.

However, it did not reach a point wherein the secondary cap was transgressed based on the prescribed trading intervals.

“The secondary cap mechanism was not imposed as breach of cumulative price threshold was not triggered,” PEMC has noted in its statement to the media.

Preliminary data, according to PEMC, exhibited “surges in market prices on few intervals.” But last weekend (July 30 to 31), it noted that spot prices have tapered off “due to decreased demand and lower temperature.”A secondary price cap of R6.245 per kilowatt-hour (kWh) would have been enforced if the cumulative price threshold of R9.00 per kWh had been breached over trading duration of 168 hours.

The spot market operator similarly gives credit to the import of capacity from the Visayas grid, primarily on the critical days and hours in the Luzon power system.

It added “less occurrences of price swelling are attributable also to the power imported from the Visayas grid to augment the insufficient capacity during peak hours in the Luzon grid.”

While the entire power industry is keenly watching developments in the supply chain as well as in the market, PEMC president Melinda L. Ocampo can just promise at this point that the market operator will remain “steadfast in maintaining transparency in market processes as it continues to reflect market prices that signal the supply and demand relationship.”

Power plant shutdowns – both scheduled downtimes and forced outages – had turned to be a “distressing instigation” of near-brownout conditions in Luzon in the past two weeks.

Had it not been for the quick response of the interruptible load program (ILP) participants as prompted by utility firm Manila Electric Company (Meralco), Luzon consumers for several times should have suffered rolling power service interruptions.