WESM suspension during red alerts a welcome reprieve amid scorching El Niño heat

Cracked dry mud is seen in a community reservoir that ran nearly empty after its retaining wall started to leak and hot weather and drought conditions accelerated the loss of water Longquan village in southwestern China's Chongqing Municipality, Saturday, Aug. 20, 2022. The very landscape of Chongqing, a megacity that also takes in surrounding farmland and steep and picturesque mountains, has been transformed by an unusually long and intense heat wave and an accompanying drought. (AP Photo/Mark Schiefelbein, File)
Cracked dry mud is seen in a community reservoir that ran nearly empty after its retaining wall started to leak and hot weather and drought conditions accelerated the loss of water Longquan village in southwestern China's Chongqing Municipality, Saturday, Aug. 20, 2022. The very landscape of Chongqing, a megacity that also takes in surrounding farmland and steep and picturesque mountains, has been transformed by an unusually long and intense heat wave and an accompanying drought. (AP Photo/Mark Schiefelbein, File)

The Power for People Coalition (P4P) on Monday welcomed the Energy Regulatory Commission’s (ERC) decision to suspend the Wholesale Electricity Spot Market (WESM) in certain cases, stating that it provides some reprieve against higher-priced electricity for consumers and communities suffering from extreme heat levels today.

In an Order dated April 30, the ERC said that spot market operations will be paused in Luzon and Visayas during red alerts, and that an administered price or other price mitigation measures will be applied during trading intervals covered by the suspension. The order was triggered by simultaneous forced outages, primarily by fossil fuel plants, that triggered yellow and red alerts and subsequently caused power interruptions across the country earlier in April.

“Today, over 200 municipalities and cities are under a state of calamity due to El Niño, and high temperatures are expected to linger this month. Filipino consumers are already getting scorched by extreme heat - we’d gladly skip even higher electricity prices resulting from outages from burning holes in our pockets. The WESM suspension provides some level of protection to keep that risk at bay,” said Gerry Arances, Convenor of P4P.

Distribution utilities resort to buying market-dictated and higher-priced power from the spot market to augment gaps in their total power requirements, such as gaps from contracted power plants going on forced outages resulting in red and yellow alerts. According to ERC, “data from the WESM for the periods when the high heat index was recorded and alert notices were issued show that the average prices per day increased by an average of 11% in Luzon and 53% in Visayas, which will translate to a significant impact in the consumers’ electricity bill.”

According to P4P, the ERC should take its action further by investigating and penalizing power companies behind simultaneous outages - especially companies benefiting from selling more expensive power through WESM than delivering reliable supply according to their contracts with distributors. P4P noted, for instance, that the Weekly Market Watch Report of the Philippine Electricity Market Corporation (PEMC) suggests that despite being subject to a forced outage, FirstGen’s Sta. Rita Gas Power Plant and San Miguel’s MPPCL Coal Power Plant continued to contribute power supply to WESM, thereby profiting at most likely a higher price since power supplies were thin during the 15 to 21 April 2024 outage period.

“We’re seeing brazen profiteering while this exacerbated El Niño drives millions to hunger and poverty. The ERC should not stop at only suspending the spot market - it and all our other energy authorities must exact accountability from erring power companies, eliminate collusion risks, and junk any petition to minimize or remove price mitigation measures, such as price caps,” Arances said.

"Meanwhile, energy authorities still peddling the delusion that coal and gas plants are needed to address power woes - DOE Secretary Lotilla himself included - should think twice before giving undue advantage to the fossil fuel players causing our problems. Consumer groups will not hesitate to hold them to account. The public office, after all, is a public trust." (PR)

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