Cheaper bills if spot mart holds

Coming from a consistent downtrend last year, the Energy Regulatory Commission, or ERC, is hoping for a sustained decline in wholesale power prices throughout the year so consumers can enjoy lower electricity rates.

Based on the ERC market analysis, the average Effective Spot Settlement Price, or ESSP, has been in a noticeable decline for all grids at P6.5 per kilowatt-hour, or kWh, from P7.885/kWh in 2022.

The ESSP indicates the effective price paid by large consumers and distribution utilities for purchases from the Wholesale Electricity Spot Market, or WESM, each billing month.

“If the downward trend continues, then, yes, we should expect lower power bills this year, especially as capacity increases with the entry of new players,” ERC chairperson and CEO lawyer Monalisa Dimalanta said in a text message.

Monitoring El Niño, imported LNG

“We are closely monitoring the impact of El Niño as well as the use of imported LNG from the gas plants that used to fully rely on Malampaya. These are two factors that could hurt pricing even as we assure continuous power supply,” she added.

Dimalanta also noted that despite the El Niño, consumers are assured of sufficient power supply as advised by the Department of Energy.

According to the ERC analysis of spot market prices, the costs have significantly eased due to the entry of 35 generation companies using renewable energy technologies as trading participants, which resulted in an additional capacity of 749 megawatts.

The entry of more clean energy sources in the energy landscape posed a significant impact on the increase in average supply for 2023, gaining 15,645 MW or a 17 percent increase from the 13,375 MW average supply in 2022.

While there was a 9 percent increase in demand in 2023, the ERC noted that additional supply appears to have met such demand and resulted in a substantial 18 percent decrease in average prices compared to 2022.

‘If the downward trend continues, then, yes, we should expect lower power bills this year, especially as capacity increases with the entry of new players.’

Mindanao-Visayas interconnection project

ERC’s study also noted the recent historic completion of the Mindanao-Visayas Interconnection Project, or MVIP, integrating all three major grids of the country, contributing to the decrease in the ESSP.

“Although the MVIP was still in the testing and commissioning phase last year with limited capacity flowing from Mindanao, the operation of WESM in Mindanao allowed the trading of supply to be integrated into the Luzon-Visayas WESM.”