ERC: WESM rates may go up by P4/kWh

SYSTEM-WIDE Wholesale Electricity Spot Market (WESM) average rates are likely to increase anywhere from P2 to P4 per kilowatt hour (kWh) next month, not only because of rising fuel prices but also due to rising demand for electricity as the dry season begins.

- By LENIE LECTURA

"There's a scenario where there will be a P2 increase. There's a scenario where it will go up to P4. There is a scenario where there will be a reduction in capacity because there are plants on outage, so the price increase will be greater." -ERC chief Francis Saturnino Juan

Energy Regulatory Commission (ERC) chairperson Francis Saturnino Juan told the Philippine Electric Power Industry Forum in Baguio City that the numbers are still preliminary based on varying simulations presented by the Independent Electricity Market Operator of the Philippines (IEMOP).

"The IEMOP simulation presented on the impact of the price increase, so it ranges from P2 to P4. But that's just a straightforward application of the impact on the marginal plant, the increase in its fuel cost. Because there are times when our market clearing prices are actually set. The marginal plant will be running on oil if the price of oil is like this, this is what their offers will be," said Juan.

IEMOP is the operator of WESM, the venue for trading electricity as a commodity in the country.

The possible P2 per kWh increase in average WESM rates is attributed to plant outage incidents which, in turn, would impact supply and demand. For the P4 per kWh increase, Juan said this is the scenario painted by experts in which the spiraling fuel prices, rising demand for electricity, and possible plant outages are all factored in. "There's a scenario where there will be a P2 increase. There's a scenario where it will go up to P4. There is a scenario where there will be a reduction in capacity because there are plants on outage, so the price increase will be greater," added Juan.

He, however, clarified that the P2 to P4 per kWh increase in WESM rates will not directly manifest in actual power generation cost, which makes up most of the consumers' electricity bill.