The Independent Electricity Market Operator of the Philippines (IEMOP) observed an increase in the spot market prices for the June 2022 billing period. The Effective Spot Settlement Price
(ESSP) in the Wholesale Electricity Spot Market (WESM) edged higher by Php 2.59 / kWh in June, bringing the average price to Php 9.01 / kWh compared to the previous billing month’s Php 6.42 / kWh. The price increase was primarily attributed to a lower supply margin – down by 258 MW or 6.22%, due to reported planned and forced generator outages in the said period. While a variety of factors drive changes in electricity market prices, mainly the supply-demand interaction, it is also largely dependent on the offer price of the generators, which considers fuel prices – to which we have observed a surge in prices (oil, coal, liquefied natural gas) in the previous weeks. As a result, the Secondary Price Cap Mechanism (SPC), which was set in place to protect consumers against sustained high WESM prices, was also applied 35.17% of the time in the June billing month.
With the increase in market price, spot market purchases decreased. The customer spot quantity in June is only at 9.1% or equivalent to 714 GWh of the total requirement for electricity in the Luzon and Visayas grids. Around 90% of the electricity consumption of end users is still sourced by the Distribution Utilities through Power Supply Agreements (PSAs) with Generation Companies at their approved contract prices. The volume of energy purchased in the WESM (in %) for June is also the lowest for the second quarter.
Meanwhile, the recorded peak demand for Luzon and Visayas dipped by 350 MW or 2.43% compared to the previous month due to the onset of the rainy season which dampened the use of cooling systems. On a year-on-year comparison, the demand was higher by 278 MW (2.02%) since the implementation of looser government restrictions due to the improving COVID-19 pandemic situation. From a regional level perspective, the peak demands for both Luzon and Visayas are also lower compared to the May billing period. Luzon’s peak demand is lower by 265 MW, while Visayas is lower by 63 MW.
During the briefing, IEMOP, as part of its function as the Central Registration Body for implementing the Retail Competition and Open Access (RCOA), also provided updates on the recent development on Retail Aggregation promulgated by the ERC. This scheme will allow end-users to aggregate their demand and participate as a Contestable Customer in RCOA and enjoy the benefit of choosing their electricity supply, offering competitive rates and value-adding services. IEMOP, for its part, is currently reviewing its processes and the needed system enhancements to accommodate and facilitate retail aggregation, which is set to take effect this year.
As part of its thrust to provide excellent and reliable market management for the WESM and to facilitate competition and customer choice through RCOA, IEMOP will continue to uphold its commitment to serving the industry through collaborative efforts with the stakeholders, the DOE, and the ERC.
