WESM rates up for 2nd straight month in July

Low supply levels despite decreased demand drove average electricity spot market prices to their second consecutive month of increase in July.

In a virtual briefing, the Independent Electricity Market Operator of the Philippines (IEMOP) said average wholesale electricity spot market (WESM) prices rose to P8.92 per kilowatt-hour (kWh) last month from P8.51 per kWh in June.

The July billing month saw a 540-megawatt (MW) decrease in average demand to 10,785 MW from 11,325 MW in June due to cooler weather conditions brought by intermittent rains and thunderstorms over the past weeks.

However, the IEMOP said there was also a notable 513MW drop in average supply due to reported forced and planned outages of some large conventional generators.

Average supply last month stood at 14,701 MW, down from the previous month’s 15,214 MW.

“These resulted in a slight 27 MW increase in the supply margin making the supply-demand situation similar to June,” it said.

The IEMOP said the imposition of the secondary price cap mechanism, a mitigating measure to protect consumers against sustained high WESM prices, was also reduced to around 28 percent of the time last month, indicating that clearing prices at more than P9 per kWh somewhat eased.

Energy consumption recorded by IEMOP in July reached 7,226 gigawatt-hours (GWh).

Customers bought 599 GWh or 8.3 percent in the spot market at an effective rate of P8.91 per kWh, lower by P0.10 per kWh compared to the previous month.

For the first few days of the August billing month, which covers the last week of July and the first few days of August, IEMOP said there was a significant decline in market prices, with average price at P6.84 per kWh.

“This may be attributable to a higher supply margin in the power bourse averaging at 4,868 MW, much higher compared to the past two months, as well as lower market clearing prices possibly due to the easing coal prices in the global market,” it said.

The IEMOP maintained normal operations of the WESM in Luzon despite the sudden dip in demand caused by the tripping of some loads in the areas affected by the powerful earthquake last July 27.

IEMOP also activated its business continuity procedures to ensure continued market operations in Luzon and Visayas grids triggered during emergency situations such as force majeure events.