Biz groups back power price cap

CEBU business groups have welcomed a regional cap on wholesale electricity prices but called for accurate billing adjustments, as Cebu Third District Rep. Karen Hope Garcia sought a House inquiry into recurring brownouts and their impact on consumers.

The Energy Regulatory Commission (ERC) ordered the secondary price cap in the Wholesale Electricity Spot Market (WESM) to be computed per grid, starting with the August 2026 billing period, after the previous system failed to adequately respond to price spikes in the Visayas and Mindanao.

The Mandaue Chamber of Commerce and Industry (MCCI) said the measure could ease pressure on businesses, while the Cebu Chamber of Commerce and Industry (CCCI) urged regulators, the market operator and distribution utilities to ensure that savings reach customers.

Regional price protection

The WESM is the market where generators sell electricity and distribution utilities and other eligible buyers purchase power, with prices changing according to supply and demand.

Utilities like Visayan Electric Company can buy electricity from the spot market to cover supply needs that their power contracts do not meet.

Under the previous arrangement, lower prices in Luzon pulled down the system-wide average used to determine whether the secondary price cap should take effect, masking higher prices in the Visayas and Mindanao, according to the ERC.

The new approach uses each grid’s rolling average price to determine whether the cap should apply, without waiting for an outage of a grid interconnection.

ERC’s move followed record power price spikes in August, when the Visayas logged 652 hours of red and yellow alerts and WESM prices reached as high as P18,590 per megawatt-hour (MWh). Mindanao recorded 89 hours of alerts, with prices reaching P19,560/MWh.

It said that its simulation showed that applying the cap regionally would have cut the average August WESM price in the Visayas by 54 percent to P8,470/MWh and by 56 percent to P8,690/MWh in Mindanao.

These are estimated changes in wholesale prices, rather than guaranteed reductions of the same size in household bills.

The effect on a customer’s bill will depend on the utility’s exposure to the spot market, its other power supply costs, other bill components and the customer’s electricity use.

Adjustments in customer bills

The ERC directed the Independent Electricity Market Operator of the Philippines to recalculate the August settlement and issue a revised final statement of billing by Sept. 20.

Distribution utilities were also directed to reflect the recalculated charges in their billing to consumers.

The Sept. 20 deadline concerns the market operator’s revised settlement bill and does not establish a single date when every household will receive a credit.

CCCI called for transparent, accurate and timely implementation, warning against treating unfinalized WESM charges as final or allowing double charging and delays in applying credits.

The chamber also urged utilities to maintain regular meter-reading schedules to avoid extended billing periods that could leave customers with unusually large bills.

MCCI said high electricity costs have forced some companies to cut expenses, retrench workers and suspend expansion and green-energy programs.

Businesses face additional costs when they rely on generators during power interruptions, the chamber said.

“The back up mechanisms of generation sets are extremely costly,” MCCI said.

It also warned that high power costs could affect Cebu’s attractiveness to foreign direct investors, particularly as the region prepares for the potential impact of the coming “super El Niño.”

Proposed House inquiry

Garcia said in a Sept. 10 statement that she had filed a resolution on Sept. 9 seeking an investigation into generation outages, transmission constraints, delayed infrastructure and their economic effects.

The proposed inquiry would call on the Department of Energy (DOE), ERC, National Grid Corp. of the Philippines (NGCP), and generation and distribution utilities to explain the recurring disruptions.

Garcia wants the DOE to provide a unit-by-unit history of power plant outages so lawmakers can examine their causes, compliance with operating requirements and any penalties imposed on operators.

“We need to establish the ground truth behind these blackouts,” Garcia said.

She wants lawmakers to determine whether consumers are absorbing costs arising from failures in power supply and planning.

NGCP figures cited in reports on her proposal showed that the Visayas grid had recorded 94 yellow alerts and 31 red alerts as of Sept. 4.

Her proposal also seeks a dated plan to accelerate transmission projects serving Cebu, covering construction schedules, pending permits, right-of-way issues and completion targets.

Supply reliability and accountability

MCCI said Cebu also needs reliable baseload power, or supply that can meet continuing electricity demand, and closer monitoring of NGCP’s transmission development plan.

Garcia’s proposal seeks scrutiny of the performance of power plants, including major facilities in Toledo City, and compliance with financial-benefit obligations to communities hosting energy facilities.

The DOE has taken separate enforcement action against 175 generation companies over missed reporting requirements, according to a July 3 Philippine Information Agency report.

That action requires the companies to explain their noncompliance and does not, by itself, establish that they caused the September outages.

The ERC also ordered a review of WESM rules and an investigation into whether generators’ bidding, offers and dispatch behavior during periods of high prices involved economic withholding, cartelization or other anti-competitive conduct.

NGCP was separately given 30 days to assess how existing grid interconnections could be used more effectively.

The market investigation is intended to determine whether supply shortages alone explain the price spikes or whether conduct by generators requires regulatory action. / KOC, CDF