Friday, July 06, 2007 Power rates to go up without additional supply in Visayas
IF all goes well, Visayas power distribution utilities will begin “shopping” for supply in a market-like setup shortly after December this year as the National Transmission Corp. (Transco) works on restoring transmission lines linking Visayas and Luzon.
But with additional power supply of new capacity plants to be available in 2010 yet, the commercial operation of the Wholesale Electricity Spot Market (WESM) in Visayas would not bring prices down as everyone hopes it would, said Philippine Electricity Market Corp. president Lasse Holopainen.
Holopainen said during a press briefing on WESM last Wednesday that power rates may be reduced with the entry of 200 megawatts from the coal-fired power plant, a joint venture of the Korean Electric Power Corp. (Kepco) and Salcon Power that is expected to become operational in 2010 in Naga, Cebu.
“At present, (with low supply), mabuang gyud ang prices,” he said. (With low supply, prices would go crazy)
The WESM is like a market, except that the commodity on sale is electricity instead of basic goods.
In the WESM, different vendors — power producers — display or offer their goods for sale. Consumers — distribution utilities and qualified electric cooperatives — can choose from among the different vendors that offer the cheapest quality goods (electricity).
Trading participants, independent power producers and distribution utilities, will be made to submit hourly offers and demand bids stating the price and quantity of electricity they are willing to trade.
Based on the law of supply and demand, Holopainen said if there is more demand (than supply), the price of the supply would go up.
He said open access and 70 percent completion of the privatization of government-owned power generation and transmission assets will also bring in more competition, which is expected to drive down prices.
Earlier, Energy Secretary Raphael Lotilla said the Visayas WESM commercial operation will be in December this year.
PEMC executive vice president Mario Pangilinan said the target date for commercial operation of WESM Visayas has been moved as fiber optic cables linking Luzon and Visayas were affected by typhoon Milenyo.
Transco is expected to complete the restoration of the fiber optic lines this December, according to a presentation by WESM last Wednesday.
In the ongoing WESM Visayas trial operations, 11 of 15 generators have registered, including the National Power Corp., independent power producers, Mirant and Philippine National Oil Co.-Energy Development Corp. There are 16 customers —private distribution utilities, rural electric cooperatives and industrial or commercial users —out of 55 that have registered.
Pangilinan said PEMC expects 99 percent of generators and customers in the Visayas to participate in WESM like its Luzon operations.
In his presentation, Pangilinan said that for this year, Cebu has a dependable capacity of 390 megawatts a day while average demand is 329 megawatts daily. Since the average amount of power generated by plants in Cebu is only 131 megawatts, the province has to import 199 megawatts from Leyte. (LAP)
