Power rates at the Wholesale Electricity Spot Market increased by more than P1 per kilowatt-hour in December because of plant outages and the derating of natural gas stations.
The Independent Electricity Market Operator of the Philippines said the effective spot market settlement price reached P6.245 per kWh in December, up from P5.15 per kWh in November.
The increase will affect the power rates of Manila Electric Co., the country’s largest power retailer this month.
“We are currently waiting to receive all suppliers’ billings, but the most important factor that will affect the January 2022 generation charge will be the outcome of WESM prices,” Meralco vice president and head of utility economics Lawrence Fernandez said.
“While demand in the Luzon Grid declined in December, we also saw an increase in the generation capacity on outage. Fuel supply from Malampaya still remained constrained in December, affecting the operation of gas-fired power plants,” Fernandez said.
IEMOP chief operating officer Robinson Descanzo said WESM rates traditionally decline in December amid cooler temperature, but rates went up this time as many power plants were not operating.
IEMOP operates the WESM, the trading floor of electricity.
“Numerous plants [were] on outage, including derated output of natural gas plants,” Descanzo said when asked what led to the WESM rate increase.
The secondary price cap was triggered several times at the WESM, specifically on Dec. 1 to 2, Dec. 17 to 19 and Dec. 21 to 23.
“The more frequent triggering and extended imposition of the secondary price cap indicates persistent high prices in the WESM,” Fernandez said.
“We are hoping that reductions from our other suppliers can partly offset an increase in WESM charges,” he said, adding that the rate announcement may be moved to Monday.
Meralco announced an increase in the overall rate for a typical household by P0.3143 per kWh to P9.7773 per kWh in December from P9.4630 per kWh in November on the back of higher generation charges.