DOE chief sees no high spike in power rates
Energy Secretary Carlos Jericho Petilla is optimistic that power players would behave better at the country’s electricity spot market to avoid a repeat of the December 2013 record high spike in electricity rates.
The Energy Regulatory Commission’s (ERC) Investigating Unit (IU), meanwhile, recommended continuous review of other regulatory measures to permanently avoid bidding misbehavior in the market.
“The IU recognizes that the Electric Industry and its WESM is dynamic. Technology, fuel resources, fuel types and other factors affect the bidding behavior of WESM members. As such, the WESM rules and other regulatory statues should be considered for review,” it said in a report on the December 2013 price hike released last week.
This developed as militant group Bayan-Muna continued to press the ERC to order Manila Electric Co. to refund its customers, a call which Meralco said it is willing to do pending an order from the power regulator.
“There are already measures in place,” Petilla said, noting the price caps now in place at the Wholesale Electricity Spot Market (WESM), the country’s trading floor for electricity.
Petilla said that even before IU released its findings on the December 2013 price hike, the stricter environment at the WESM now has already deterred power players from misbehaving.
The price cap is the highest offer that sellers can give when they sell their electricity to the market. Power suppliers with the lowest price get to supply the requirements of distribution utilities but the last offer is the one that sets the price for which they will be paid.
In May last year, the ERC imposed the secondary cap of P6.245 per kilowatt-hour (kwh) at the WESM after rates at the spot market skyrocketed in December 2013, resulting in the record high generation charge of Meralco to P9.10 per kilowatt-hour during the month from only P5.67 per kwh in November 2013.
The secondary cap takes effect whenever there is a breach of the average threshold of P8.1855 per kwh over a 72-hour period at the spot market.
At the same time, Petilla stressed that higher penalties should also be slapped on power players that they may avoid a repeat of alleged anti-competitive behavior in the market. “There should be higher penalties,” he noted. In the report the ERC’s IU said 12 power players withheld power supply during the December 2013 period which led to the record high increase in electricity rates at the time.
According to the report, these power players are the Power Sector Assets and Liabilities Management Corp. (PSALM), Pan-Asia Energy Holdings, Therma Mobile (TMO), CIP II Power Corp., Trans-Asia Power Corp., 1590Bauang, AP Renewables, Udenna Management Resources Corp., Strategic Power, GN Power, SEM-Calaca and Meralco.
The report, which came more than a year after, however, did not tackle market collusion.
The ERC en banc would still have to decide on the IU’s report and come up with its own findings based on the data submitted by the unit.
“It’s now up to the ERC to decide. Numbers will not lie,” the Energy chief said.
Most of the respondents have yet to air their side on the matter.
Meralco, in its statement maintained that it had complied with the rules.
“While we have not yet been furnished with a copy of the ERC IU report, Meralco maintains in its assertion which it had articulated before the ERC, Congress and Supreme Court, that it had acted strictly in accordance with the decision of the ERC approving the Power Supply Agreement with TMO which took into account Meralco’s least cost obligation to its consumers. The records will bear that Meralco complied with applicable market rules and did not engage in any anti-competitive behavior in its supply contract with TMO,” said William Pamintuan, Meralco’s head of Legal.