Electricity spot prices trending downwards for August

Published August 20, 2021, 3:45 PM

by Myrna M. Velasco

With cooler temperatures, higher availability of hydro plants and the relatively lower power demand, prices of electricity in the Wholesale Electricity Spot Market (WESM) has been trending downwards this month.

In a presentation to the media, Engineer John Paul Grayda, manager for pricing evaluation and analysis of the Independent Electricity Market Operator of the Philippines (IEMOP), has noted of downward trend even with price spikes this month that necessitated the imposition of secondary price cap of P6.245 per kilowatt hour (kWh). Such happened in one instance only on August 18 and is still seen preliminary because cut off will be on the 26th of the current month yet.

The spot market operator stated that it logged “lower spot prices for August 2021 as the nation experiences intermittent rains and thunderstorms, along with the imposition of varying levels of quarantine restrictions.”

As emphasized, spot market prices at the onset of the August supply month had been at P5.03 per kilowatt hour (kWh); and that has been P1.49 per kWh lower than the July average price at P6.52 per kWh.

“The colder weather and the implementation of community quarantine causes the lowering of prices as opposed to summer,” IEMOP expounded.

When it comes to imposition of secondary price cap because of surging spot prices, Grayda specified that such happened more frequently also in July – recurring at least five times on July 1, 2, 3, 12 and 13.

To note, the Inter-Agency Task Force (IATF) has re-imposed enhanced community quarantine (ECQ), or the strictest lockdown in the capital from August 6-20; along with neighboring provinces; while many areas were also on modified enhanced community quarantine (MECQ) restrictions.

Strict lockdowns directly entail the closure of many business establishments that in turn resulted in depressed electricity demand, primarily in Luzon grid where most of the country’s economic centers are located.

Because of demand deceleration, the market operator similarly pointed out that there had been “increase in average supply for August in comparison to the previous month” – and that was a difference of 6.20-percent or additional 801 megawatts of supply in the power system.

Within the month of July, system peak demand posted 4.87-percent downtrend to 13,802 megawatts, or there was a decline of 670MW compared to June level.

For both Luzon and Visayas grids, it was indicated by IEMOP that demand had been lower by aggregate 552MW – with Luzon grid registering peak demand of 11,049MW; and Visayas by 2,107MW.

The next critical period being monitored by all stakeholders, including that of the WESM, will be the scheduled 20-day shutdown of the Malampaya gas production facility in October this year, as that might trigger another round of spikes in spot market prices.