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ERC studying possible removal of price threshold mechanism in power trading

Posted on August 11, 2015

By Juzel L. Danganan

MANILA, August 11 (PNA) –The Energy Regulatory Commission (ERC)is studying new measures for the power market , which might remove the price threshold mechanism at the Wholesale Electricity Spot Market (WESM).

ERC Commissioner Josefina Patricia Magpale-Asirit said the ultimate goal was to have a comfortable supply and capacity situation, where generation companies will offer their prices for the consumers’ benefits.

”We are studying whether we still need the secondary cap, even if there’s an offer cap,” she said Tuesday in an interview at the sidelines of the Technical Consultation Meetings on the Study on the Development and Review of the Methodology and Determination of the Levels of Offer Price Cap and Floor, and Market Price Cap and Floor for Energy and Reserves held Tuesday at the Development Academy of the Philippines (DAP).

She also said that the regulatory body, along with the Department of Energy (DOE) and the Philippine Electricity Market Corp. (PEMC), is also studying whether the two caps can co-exist and how, while also looking at the option whether one should be chosen over the other.

The PTM, which is the permanent version of the WESM secondary cap, sets the lowest offer rate at Php 6.245 per kilowatthour (kWh) and raises the threshold to Php 9 per kWh from Php 8.196 per kWh. It also had an extended trading reference from three to seven days.

Asirit cited the market offer cap started with a rate of Php 62 per kWh but later was slashed to Php 32 per kWh after the sharp increase in trading prices during November and December 2013.

She explained the Php 32 rate was patterned after the Interim Mindanao Electricity Market (IMEM), adding the rate was scrutinized if appropriate to enforce in Luzon, since Mindanao was a market of its own.

Asirit noted the three offices did not want high prices, nor do they want converging offers.

Asirit said a decision from the parties on whether the PTM will be retained could come out within the coming weeks.

She added the three offices are studying what to adjust –- to both address the need of the investors and the balance the interest of the consumers.

Asirit said the ERC was seeking to find a balance on operating power providers with profit while they don’t burden the consumers.

She noted the current performance of the market proved that an investor could still enter the trading market, showing his investment would earn a particular return over a period of time. (PNA)

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