WESM mitigating measure set ahead of Malampaya repair

By Myrna M. Velasco – June 21, 2017, 10:00 PM

from Manila Bulletin.

To cushion cost impact on consumers for “extraordinary events” affecting electricity supply flow, a supplementing mitigating measure at the Wholesale Electricity Spot Market (WESM) had already been given regulatory nod ahead of the scheduled next round of repairs at the Malampaya gas production facility this July and September.

On those periods, gas restriction from the gas field is widely anticipated, hence, this could have prospective adverse sway in prices in the spot market.

As advised by the Department of Energy (DOE) to relevant industry players, gas restriction will be experienced at Malampaya field at its scheduled maintenance on July 15-17 and September 23-25 this year.

The move to come up with added ‘WESM mitigating measure’ had been prodded early this year – also at the thick of preparations for the 20-day shutdown of the Malampaya facility in January-February. Regulatory deliberations took some time though to finalize such.

Based on the approval of the Energy Regulatory Commission (ERC), it has shortened to five days or 120-hour trading interval the duration of the prescribed cumulative price threshold (CPT) of P9.00 per kilowatt- hour (kWh) in the WESM so that the secondary cap of P6.245 per kWh could be enforced to market participants.

That had been technically reduced from what was earlier cast as seven days or aggregate trading interval of 168 hours prior to hitting the price threshold.

“A recalculated cumulative price threshold level at P1,080,000.00 equivalent to the generator weighted average prices (GWAP) over a rolling 5-day period or 120-hour trading interval, is hereby set in the WESM,” the ERC has stipulated.

It added that such would be equivalent to an average spot price of R9.00 per kWh – and crunched based on occurrences of peak and off-peak prices in the electricity market.

The ERC said it deemed necessary to introduce some refinements to the secondary cap scheme, “for the mitigation measure to remain effective in curbing high market prices triggered by extreme conditions and for it to be relevant with the current market conditions.”

The secondary cap is another layer of “price softening measure” in the spot market; the primary of which is the WESM cap of P32 per kWh, a level reduced from P62 per kWh when fiasco on Malampaya shutdown incidents happened in 2013.

The ERC added it will “continue to review and evaluate the market conditions,” and “if market developments and circumstances so warrant, it may initiate further amendments to the mitigation measure.”