WESM operator sees power rate spikes

Published January 16, 2022, 10:30 PM

by Myrna M. Velasco

Filipino consumers may need to brace for higher electric bills next month as prices in the Wholesale Electricity Spot Market (WESM) were ticking up when system operator National Grid Corp. of the Philippines (NGCP) declared a two-day “yellow alert” in the Luzon grid recently.

The recurrence of “forced outages infection” of several power plants, plus the generation de-rating of other facilities on Jan. 10-11 had drastically taken out 2,265 megawatts of power capacity in the system and that caused “insufficiency of reserves” which had strained the country’s biggest power grid.

DU facilities’ photo

Initial data from WESM operator Independent Electricity Market Operator of the Philippines (IEMOP) showed that as of Jan. 13, the secondary price cap of P6.245 per kilowatt hour (kWh) had been triggered for at least seven days out of the 19 trading days in the prevailing supply month.

For the secondary price cap to be enforced, the Energy Regulatory Commission (ERC) has consistently sounded off that “sustained price hikes” had already been logged in various trading intervals in the spot market and the outcome of that could be increase in pass-on cost to the electricity consumers.

The power plants that plunged into forced outages last week include: GNPower Dinginin coal facility unit 1 (668MW); GNPower unit 1 coal plant (316MW); Calaca unit 1 coal facility (300MW); and Avion unit gas-fired plant (47MW).

The facilities with de-rated capacities were: Ilijan plant (reduced generation by 505 vis-à-vis 1,200MW); Masinloc coal unit 2 (de-rated by 39MW vis-à-vis maximum capacity of 344MW); Magat hydro plant with de-ration of 180MW as against 340MW; and San Gabriel gas plant of which generation had been trimmed by 210MW vis-à-vis its installed capacity of 420MW.

For the electricity generation de-rating of the gas plants, it was emphasized that such was due to the gas output restriction of the Malampaya field, which is now at its depleting state.

When asked on the action to be taken on the problematic forced or unplanned outages of the power plants, the Department of Energy (DOE) and the ERC have not given commitments yet of any investigation to get into the bottom of the technical glitches suffered by the generating facilities.

Typically, January is a low-demand month and “yellow alert” incidents should not have been happening around this time especially since many business establishments are not on full operations because of the lingering COVID-19 pandemic. The weather temperatures would still not warrant air-conditioning systems to be switched on for longer hours also.

Based on IEMOP’s daily operations report, average demand in Luzon grid during the Jan. 10-11 “yellow alert” period had been at a low of 8,139 megawatts and 8,120MW respectively, roughly 2,500MW lower than the average demand on summer months.

Historically, Luzon grid was just usually placed on “yellow alert” during summer months when demand reaches its peak and such condition in the power system was almost never experienced in January or February due to low demand.

So far, the only time that the Luzon grid was set off on yellow alert was in 2020, but that was mainly due to the eruption of the Taal volcano, when plants had to be placed on shutdown as a recourse to prevent damage on equipment.

To date, the DOE has not issued any update yet on power supply-demand outlook, especially on the critical months of summer. As of the agency’s October 2021 outlook, projected peak demand is seen at 12,387MW by May 2022, which will be higher by 747MW from peak demand of 11,640MW last year.