EVEN when the Philippine Electricity Market Corp. (PEMC)-run Wholesale Electricity Spot Market (WESM) begins commercial operation in the first quarter of next year, an industry official said electricity prices will not go down.
Cebu Power Core Group chairman Carlos Co also expressed uncertainty about the trading of electricity at WESM due to the unsteady supply of power in the Visayas.
He said, though, that WESM would be a venue for distribution utilities and qualified electric cooperatives to buy the cheapest electricity.
In WESM, 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.
“It will not be effective in Cebu because we don’t have excess power,” Co said.
Peak hours
But PEMC president Lasse Holopainen stressed that the power shortage in the region only happens on peak hours and at certain times of the year, contrary to speculations that the overall electricity supply scenario has worsened.
In an interview with reporters last Tuesday, Holopainen admitted that when WESM Visayas starts full-blown operations next year, the price of electricity will be high because of the low supply.
But the spot market will also help determine the real price of electricity, he said.
As the law of supply and demand suggests, he said that if there is more demand, the price of the supply would go up.
But Holopainen is optimistic that power rates will go down with additional supply from new capacity power plants that are expected to become operational in 2010 in Cebu.
Co said the coal-fired power plants of Salcon Power and Korea Electric Power Corp. (Kepco) in Naga, Cebu that have an expected combined capacity of 200 megawatts are projected to be operational in December 2010.
Earlier, Kepco president Kang Won Lee said that by December 2010, Salcon-Kepco’s first 100-megawatt boiler will start commercial operations; in three months, its second boiler will be operational.
This development will attract investors to the local power industry, which will eventually create a competitive price market for electricity, Holopainen said.
“That is why we encourage distribution utilities to cover themselves with their contract,” he said.
Epira
Under Republic Act 9136 or the Electric Power Industry Reform Act (Epira), distribution utilities are required to get at least 10 percent of their supply from WESM.
Power generators are required to offer their entire power capacity but WESM will consider those that have already been contracted to different distribution utilities, Holopainen said.
Distribution utilities like the Visayan Electric Co., Cebu Electric Cooperative 1 and 2 have existing supply contracts with the National Power Corp. and independent power producers. These contracts are valid for several years yet.
Holopainen said WESM operational charge is only one centavo per kilowatt hour.
The Epira provides for the establishment of an electricity market that reflects the actual cost of electricity. Through competition that will, in turn, lead to more efficient production of power, the market is seen to bring down the prices of electricity.
Holopainen said WESM not only gives consumers competitive electricity prices, but allows transparency and accurate information on electricity costs.
In the ongoing WESM Visayas trial operations, 11 of 15 generators and 16 customers —distribution utilities, electric cooperatives and industrial or commercial users —out of 55 have registered. (MMM)
