La Niña seen pulling down power rates this October

Published October 15, 2020, 6:00 AM

by Myrna M. Velasco

The La Niña weather phenomenon has already started driving down electricity rates this October in the country’s Wholesale Electricity Spot Market (WESM), with it going down by more than P1.00 per kilowatt hour (kwh) as of October 12 to P2.19 per kwh from the September average market price of P3.48 per kwh.

This anticipated reduction in electricity rates will be reflected in the bills of consumers in November, given the one-month lag time on the rates pass-on.

In a virtual briefing with the media, Engineer John Paul Grayda, pricing validation and analysis manager of the Independent Electricity Market Operator of the Philippines (IEMOP), indicated the main reason for the downtrend in rates was the kick-off of La Niña season early this month, which consequently triggered the cooler temperatures.

From last month’s record peak demand of 12,586 megawatts, he further noted that the highest demand logged for October had just been at 12,259MW, lower by 327MW so far.

Aside from the drop in temperatures because of the prevailing weather condition, Grayda qualified the other factor contributing to soft demand rests on the fact that Metro Manila, which is the country’s key economic center, is still at general community quarantine (GCQ) phase of movement restrictions because of the coronavirus pandemic, entailing then that businesses have still not fully opened up.

Based on power consumption tracked in roughly two weeks of the current month, the IEMOP executive stated that this particular period may not be able to breach last year’s record on a comparative month.

There are also presumptions that lower rates may prevail throughout the La Niña period, which is seen stretching until early part of next year – provided that the power plants will not suffer simultaneous forced outages, especially during the scheduled maintenance of the Malampaya gas facility in November.

“The forecast is extended La Niña, so with that assumption we see that demand will potentially be on downtrend,” Grayda stressed.

And if the hydro plants will have higher dispatch in the succeeding weeks and months, he emphasized that such will also contribute to further lowering of electricity rates.

However, Grayda specified that these initial calculations on power pricing would partly be anchored on the relaxation of quarantine measures in the country, particularly if Metro Manila will already be upgraded to modified general community quarantine (MGCQ) next month – and more businesses will be allowed to fully recommence operations.

“That will depend on quarantine protocols that will be implemented. Because once we are upgraded to MGCQ in Metro Manila, we can see that there will be increase in demand,” he said.

As a matter of fact, the general expectation of stakeholders in the power industry will be escalation in electricity usage through the last quarter of the year — as the manufacturing sector may ramp up production of key commodities to keep pace with the higher demand of consumers for the Christmas holidays.