Higher power spot market rates loom
By Brix Lelis – February 14, 2025 | 12:00am
from The Philippine Star
The Wholesale Electricity Spot Market (WESM), the centralized venue for electricity trading as a commodity, saw its average price drop to a two-year low of P2.96 per kilowatt-hour (kWh) last month.
MANILA, Philippines — Electricity rates in the country’s power spot market are likely to rise in the coming months due to higher demand driven by the summer heat and election campaign rallies.
The Wholesale Electricity Spot Market (WESM), the centralized venue for electricity trading as a commodity, saw its average price drop to a two-year low of P2.96 per kilowatt-hour (kWh) last month.
But the Independent Electricity Market Operator of the Philippines (IEMOP), which operates WESM, warned that this low rate may not last as market prices could spike during the dry months.
“It is just a supply and demand condition. Of course, when it’s hot, we can see that there will be an increase in demand. So, therefore, prices increase during the summer months,” said Chris Warren Manalo, assistant manager at IEMOP’s trading operations department.
Electric cooperatives and distribution utilities typically rely on WESM to meet their energy requirements for a given period when their supply falls short of the projected demand.
For power giant Manila Electric Co. in particular, about 28 percent of its energy needs for the January supply period were sourced from WESM.
And this lower WESM rate in January was said to have helped mitigate the impact of higher costs from independent power producers and power supply agreements.
According to Manalo, spot prices in February are anticipated to remain almost the same as last month due to continued cold weather conditions.
“The price between January and February is not expected to differ much. I think it will be at the same level, with either a slight increase or decrease, but still within the same range,” he noted.
IEMOP trading operations head Isidro Cacho Jr., meanwhile, said political campaign sorties could also drive demand during the dry season.
Based on IEMOP data, the average demand from February to May 2022, during the presidential election season, was 12,222 megawatts (MW).
This resulted in an average spot market price of P6.34 per kWh during the four-month period.
For 2025, Cacho remains confident that the country’s supply is sufficient to meet the expected surge in demand in the coming months.
“Compared to last year, this year looks much better in terms of supply, which means more stable prices in the market,” he said.
With the onset of the La Niña, Cacho also expects demand to be “tamer” this year compared to last year, which was compounded by El Niño.
“Generally, our demand will increase because of the summer, but compared to last year, it will possibly not reach the same peak this year,” he said.
In May 2024, the system-wide demand in WESM reached 15,688 MW, pushing the average power rate to as high as P8.22 per kWh, IEMOP data showed.
