ERC extends second price cap on WESM rates

Posted at 06/23/2014 8:33 PM

MANILA – The Energy Regulatory Commission (ERC) has extended the implementation of the secondary price cap on rates of the Wholesale Electricity Spot Market (WESM) in anticipation of tight power supply in the coming months.

In a resolution, ERC said the secondary price cap of P6.245 per kilowatt-hour is extended by another 45 days.

The secondary price cap was initially scheduled to take effect from May to June 25.

ERC explained that tightness in supply is expected as several power plants in Luzon are scheduled for maintenance outage, which coincided with reduced generation in hydropower plants due to El Nino.

"Whereas, for the protection of public welfare and to mitigate the sustained high prices in the WESM, which may be caused by the expected tight supply in the coming months, the commission, pending the submission of PEMC (Philippine Electricity Market Corp.) and its approval of the permanent mitigating measure in the WESM, finds merits in extending the secondary cap implementation," the regulator said in its resolution.

Private power plant operators, meanwhile, are asking the court to declare as void the ERC order implementing the secondary price cap in May.

“The assailed resolution should be struck down as unconstitutional, invalid and illegal," the Philippine Independent Power Producers Association Inc. (PIPPA) said.

PIPPA also said the ERC went beyond its mandated powers under the Electric Power Industry Reform Act of 2001 when it implemented the secondary price cap, adding that the regulator issued the order without notice and public hearing.

The group said the ERC may only suspend WESM operation or declare temporary WESM failure during national and security emergencies.

"A significant decrease in the supply of electricity is not among the grounds for which it may intervene in the WESM,” said PIPPA.