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June WESM prices softened 24% as rainy season starts

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By Alena Mae S. Flores – July 3, 2024, 7:15 pm
from manilastandard.net

Preliminary rates at the Wholesale Electricity Spot Market (WESM) softened in June 2024 by 25 percent with the onset of the rainy season which brought cooler temperatures.

WESM serves as the trading floor of electricity.

Data from the independent Electricity Market Operator of the Philippines (IEMOP), the operator of WESM, show that the system wide average rates went down to P6.15 per kilowatt-hour in June from P8.22 per kWh in May.

IEMOP corporate planning and communications manager Arjon Valencia attributed the decline to “decrease in demand due to the wet season.”

Power demand dropped 6.2 percent in June to 14,710 megawatts from 15,688 MW in May while supply declined slightly by 0.1 percent to 19,648 MW.

Average rates across the three grids showed a decline, with Mindanao showing the biggest drop by 36.6 percent to P4.61 per kWh from P7.26 per kWh in May.

Luzon followed with a reduction of 27.9 percent to P5.97 per kWh from P8.28 per kWh and Visayas by 2.9 percent to P8.56 per kWh from P8.81 per kWh.

Manila Electric Co. consumers, however, can still expect higher generation rates despite the lower WESM charges in June.

This is due to the decision of the Energy Regulatory Commission (ERC) ordering all distribution utilities and electric cooperatives to stagger the collection of charges covering spot market purchases in the May supply month in four equal monthly installments starting this billing month until September 2024.

“We would like to advise this early that our customers can expect generation charge to increase in succeeding months as we collect the deferred amounts on staggered basis as result of the recent developments,” Meralco vice president and head of corporate communications Joe Zaldarriaga said earlier.

Meralco, Quezon Power (Philippines) Ltd., San Buenaventura Power Ltd. Co. and South Premiere Power Corp. also deferred the collection of P500 million in generation costs to cushion the impact of higher pass-through charges to Meralco’s customers in June.

These will be collected over the next three billing periods, as cleared by the ERC.

“With these already deferred costs, and the recent order of the ERC to also stagger the collection of WESM charges, around P0.77 per kWh will be added every month to the generation charge in the July to September bills,” Zaldarriaga said.

The higher rates in June were driven by the higher feed-in tariff allowance, increase in prices at the WESM and higher transmission charges due to a directive by the ERC to partially lift the suspension on settlement amounts in the reserve market.

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