Wholesale power price drops to P2.28 per kWh in Dec.

THE average price paid by distribution utilities and other wholesale buyers of electricity fell to P2.28 per kilowatthour (kWh) in December 2016, the lowest since January 2011, the governance arm of the power market said on Tuesday.

“Prices in the market are result of commercial forces,” said Melinda L. Ocampo, president of the Philippine Electricity Market Corp. (PEMC), in a statement.

Prices at the wholesale electricity spot market (WESM) for the December billing period was slightly lower than November’s P2.27/kWh effective settlement spot prices previously reported by PEMC last month.

“These market prices send signals to investors to make sound investment decisions on the timing of installation, capacity and type of resources. We see that WESM plays a pivotal role in a liberalized and deregulated market environment,” Ms. Ocampo said.

During the period, distribution utilities and customers directly withdrawing from the grid sourced 21% of their requirements from WESM, the centralized venue for buyers and sellers to trade electricity as a commodity. WESM prices are based on actual use or demand as against availability or supply.

Manila Electric Co., the country’s largest utility, bought nearly 22% of its supply requirement from WESM to benefit from the low prices, the market operator added.

For the December 2016 billing period, coal accounted for 45.5% of the electricity generated in the Luzon and Visayas grids. Natural gas followed with a share of 25.5%. Geothermal came out third with 13.9%, trailed by hydroelectric power at 9.5%. Wind resources round out the top 5 with 2.8%.

“As we reap the benefits of a working WESM, we are preparing for the full implementation of retail competition where hopefully the efficiencies in electricity trading will redound to the benefit of contestable customers,” Ms. Ocampo said. —