THE Energy Regulatory Commission (ERC) is in no rush to set a new secondary price cap that limits the spike in energy prices at the wholesale electricity spot market (WESM), saying more pressing matters needed faster resolution.
“In the order of things, ang dami kasing pumasok na very urgent (several very urgent matters came in),” ERC Chairperson and Chief Executive Officer Agnes VST Devandera told reporters last week.
“Anyway, there’s one in place,” she added.
The ERC’s stance comes months after it asked market participants to submit until Nov. 4, 2019 their written comments on a draft resolution proposing to lower the secondary price cap to P4,502 per megawatt-hour (MWh) from P6,245/MWh to reflect current market conditions.
In a draft resolution, the secondary price cap will be imposed once the threshold 72-hour rolling generator weighted average price, or GWAP, is breached.
Ms. Devandera said the ERC could not say whether the draft would be issued in its final form in the first quarter or the first half of the year.
“[There’s] one in place for summer. For April or May meron pa naman ‘yung old cap (the old secondary cap is still there,” she said.
The decision comes despite expectations that power supply will be tight during the summer months. A deficiency prompts electricity distribution utilities to source additional supply from the spot market at prices higher than those pre-agreed in power supply deals. The higher prices form part of the charges tucked into consumers’ monthly power bill.
In its draft resolution, the ERC said the country continues to have tight power supply, which is worsened by plant outages, thus leaving consumers vulnerable to high WESM prices.
It said recent developments in the electricity market “impelled the ERC” to review existing threshold levels of the secondary price cap schemes and recalculate the same based on market data using the period 2016-2018.
The commission recalculated the cumulative price threshold level to P6,919/MWh equivalent to the generator weighted average price over a rolling three-day period or 72-hour trading interval in the WESM. The previous threshold was P8,186/MWh.
The ERC first imposed the secondary price cap through a resolution issued on May 5, 2014 as an urgent and interim mitigating measure in the WESM to counter spikes in the market prices of electricity.
On June 16, 2014 and Aug. 5, 2014, the regulator extended the effectivity of the pre-emptive measure for a specified period or until the creation of a permanent one, whichever comes earlier.
On Dec. 15, 2014, it made the measure permanent, thus putting a limit to the impact of extreme price volatilities and excessive levels of prices in the WESM. — Victor V. Saulon
