Power plant outages push up spot market prices in June

The average price at the Wholesale Electricity Spot Market (WESM) rose by 2.59 per kilowatt-hour in June, largely due to forced and planned outages of power plants.

This brings the average price to P9.01 per kWh compared to the previous billing month’s P6.43 per kWh.

Independent Electricity Market Operator of the Philippines (IEMOP), operator of the electricity spot market, attributed the price increase to planned and forced generator outages in the said period.

IEMOP said a variety of factors drive changes in electricity market prices, mainly the supply-demand interaction, but it is also largely dependent on the offer price of the generators, which considers fuel prices –to which we have observed a surge in prices(oil, coal, liquefied natural gas)in the previous weeks.

As a result, the Secondary Price Cap Mechanism(SPC), which was set in place to protect consumers against sustained high WESM prices, was also applied 35.17 percent of the time in the June billing month.

Around 90% of the electricity consumption of end-users was still sourced by the distribution utilities through power supply agreements (PSAs) with generation companies at their approved contract prices.

Meanwhile, the recorded peak demand for Luzon and Visayas declined by 350 MW or 2.43 percent compared to the previous month due to the onset of the rainy season, which dampened the use of cooling systems.

On a year-on-year comparison, the demand was higher by 278 or 2.02 percent since the implementation of looser government restrictions due to the improving COVID-19 pandemic situation.

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