DOE eyes new rules to prevent spot market failure

Posted at 03/12/2014 11:39 AM | Updated as of 03/12/2014 11:42 AM

DOE eyes new rules to prevent spot market failure

MANILA, Philippines - Energy Secretary Jericho Petilla wants new rules in place at the electricity spot market to prevent another market failure.

The Energy Regulatory Commission has voided spot market prices from October to December last year, citing unreasonable spikes in energy prices.

Petilla says he is happy that the ERC has finally reached a decision regarding the case, but stresses that there should be measures to prevent a repeat of the incident.

"Ako naman ay natutuwa at nakapag-desisyon na ang ERC. Yun ang pinaka-mahirap, hindi mo alam ang kinakalabasan. At least ito, meron na. May kokontra man, at least may desisyon na," he told DZMM.

"Ang tinitignan natin dito, ano ba ang pwedeng ilagay dito sa rules natin na kung may pagkakataon na nagwawala ulit (ang presyo) eh talagang maaresto natin at hindi after one month kung di after one month, on the spot," he added.

On Tuesday, the Energy Regulatory Commission said it had voided the record high spot electricity prices of late last year, saying Meralco and other distributors can only charge their customers the average of prices in the first nine months of the year, which was before the spikes caused by shutdowns in Malampaya and several power plants.

ERC says this so-called regulated price will be about 70% less than market prices at the time. But generation charges won't go down by 70%, only the part that was sourced from WESM.

Most distributors buy most of their power at fixed prices under long-term contracts.

ERC ordered Philippine Electricity Market Corp. (PEMC), operator of the spot market known as WESM, to re-calculate these prices and transmit them to distributors. - ANC