Electricity market suspended to avoid spike in power bills

These images taken on April 24, 2024 show the Dolores substation of the National Grid Corp. of the Philippines (NGCP) in Taytay, Rizal. The NGCP raised a red alert this Wednesday due to the shortage of power supply and power reserves in its Luzon power plants. PHOTOS BY JOHN ORVEN VERDOTE

THE Energy Regulatory Commission (ERC) has temporarily suspended the operation of the Wholesale Electricity Spot Market (WESM) during red alerts to mitigate the anticipated increase in electricity prices, President Ferdinand Marcos Jr. said Wednesday.

In his speech during a Labor Day event in Malacañang, Marcos said the ERC declared the suspension of WESM operations based on notices issued by the system operator, the National Grid Corp. of the Philippines (NGCP).

“Due to extreme heat, power consumption rose, which would result in an increase in price. Yesterday, the Energy Regulatory Commission moved to temporarily suspend the operations of what we call the Wholesale Electricity Spot Market every time a red alert is declared by the system operator or NGCP,” he said.

“This is intended to prevent a hike in electric bills amid the calamity caused by El Niño,” the President added.

The WESM, created by virtue of Section 30 of Republic Act 9136, otherwise known as the Electric Power Industry Reform Act of 2001, is a venue for trading electricity as a commodity.

It is where the power generators sell their excess capacities not covered by contracts and where the customers buy additional capacities on top of their contracts.

The NGCP placed the Luzon grid on yellow alert for the third consecutive day this week due to the lack of available reserves.

A yellow alert is issued when the operating margin is insufficient to meet the transmission grid’s contingency requirement.

The Department of Energy said earlier that the unexpected power outages in over 32 power plants in April 2024 set a record.

A total of 1,811 megawatts (MW) of power were lost, more than double the average of 700 MW of power lost from 2019 to 2023.

On Monday, the President assured the public that the government would carry out plans and strategies to tame power prices amid the current high demand for electricity.

“We’re continuing to monitor the price, and we’re continuing to encourage and to endorse all of the programs of NGCP so that they will increase the coverage of their transmission lines all over the country,” Marcos said during a media interview in Cotabato.

The President also reiterated that the electricity crisis was not manmade.

“No. It definitely is not an artificial crisis because the power systems are really overloaded. Our consumption suddenly went up … because it’s very hot,” Marcos said.

“We have plans and strategies so that the electricity prices do not increase — at least for now, in this crisis time,” he added.

The ERC said during the period when the WESM is suspended, either an agreed administered price or a lower figure will be applied if conditions are applicable.

The commission said that since April 16, 2024, the electricity grid has been experiencing red and yellow alerts because of the continuous significant increase in electricity demand, combined with the total number of generation plants that have gone offline or are operating at a lower capacity.

Based on their gathered data, the ERC reported that red and yellow alert durations in the Luzon and Visayas grids increased for the first four months of the year.

In the Luzon grid, the ERC said that the red alert duration of the grid went up to 20 hours and 46 minutes in the first four months of 2024 from no records of red alerts in the same period in 2023.

The Visayas grid also showed the same trend as the ERC said its red alert duration during the first four months of 2024 rose to 24 hours and 14 minutes from three hours and 59 minutes recorded during the first four months of 2023.