The Energy Regulatory Commission (ERC) has issued a draft resolution proposing a price cap as a mitigating measure in the sale of reserve power at the Wholesale Electricity Spot Market (WESM).
The ERC is proposing a price ceiling of P19,000 per MWh in reserve power trades.
As drafted, the proposed ceiling prices will be reviewed and recomputed after a year, contingent on the collection of data from the annual submissions of generation companies.
To achieve this, the ERC ordered power companies to submit their plant economic life years, project cost, annual sales generation, fuel cost, variable operations and maintenance cost, fixed operations and maintenance cost, weighted average cost of capital, and plant utilization factor.
“This study is therefore pursued with the goal of coming up with an appropriate level of offer price and floor caps to be implemented in the Philippine Reserve Market, as part of the ERC’s mandate of ensuring the protection of the welfare of consumers whilst also ensuring that the entry of investments in the WESM and the Reserve Market is not affected,” the ERC said.
The regulator calls on interested parties to submit comments on or before 8 July this year. A public consultation is scheduled on 11 July.
ERC chair Monalisa Dimalanta previously said the suspended operations at the reserves market will be restored this July when cooler climes prevail, water reservoirs fill up and power demand is not as heavy. Its suspension in March helped push power rates higher thereafter but allowed the power companies to recover the cost of providing the service starting with the March billing month this year.
The cost recovery amounted to an initial P1.7 billion or 30 percent of the total P5.7 billion owed.
The reserve power providers still have to recover P4 billion more upon ERC approval.
