President Ferdinand Marcos Jr. Suspends Wholesale Electricity Spot Market Operations during Red Alerts
In a recent announcement, President Ferdinand Marcos Jr. of the Philippines revealed that the Energy Regulatory Commission (ERC) has temporarily suspended the operation of the Wholesale Electricity Spot Market (WESM) during red alerts. This decision aims to mitigate the anticipated increase in electricity prices caused by extreme heat and high power consumption.
The ERC’s move to suspend WESM operations is based on notices issued by the system operator, the National Grid Corporation of the Philippines (NGCP). Red alerts are declared by the NGCP when the power consumption rises to a level that could result in a significant price increase. By temporarily halting WESM operations during these red alerts, the government aims to prevent a hike in electric bills, particularly amidst the calamity caused by the El Niño phenomenon.
Understanding the Wholesale Electricity Spot Market (WESM)
To grasp the significance of the temporary suspension of WESM operations, it is essential to understand what WESM is and its role in the energy sector. The Wholesale Electricity Spot Market was established under the Electric Power Industry Reform Act of 2001. It serves as a venue for trading electricity as a commodity.
Power generators utilize WESM to sell their excess capacities that are not covered by contracts, while customers can purchase additional capacities on top of their existing contracts. This allows for a more efficient and flexible allocation of electricity resources in the market. However, during times of high demand and limited supply, such as during red alerts, the operation of WESM can potentially contribute to an increase in electricity prices.
The Need for Suspension: Yellow Alerts and Power Outages
The decision to temporarily suspend WESM operations comes as the Luzon grid in the Philippines experiences a series of yellow alerts. A yellow alert is issued when the operating margin is insufficient to meet the transmission grid’s contingency requirement. This situation indicates a lack of available reserves to meet the electricity demand, further exacerbating the potential for price increases.
Adding to the challenge, the Department of Energy (DOE) reported unexpected power outages in over 32 power plants in April 2024, setting a record. These outages resulted in a total loss of 1,811 megawatts (MW) of power, more than double the average of 700 MW lost between 2019 and 2023. The combination of yellow alerts and power outages has heightened concerns about electricity supply and its impact on prices.
Government’s Commitment to Tackle the Electricity Crisis
President Marcos Jr. has reassured the public that the government is actively working to address the current high demand for electricity and tame power prices. The administration is closely monitoring the situation and endorsing the programs of the NGCP, particularly those aimed at increasing the coverage of transmission lines across the country.
Contrary to speculation, the president emphasized that the ongoing electricity crisis is not man-made. He attributed the strain on power systems to the overwhelming demand caused by the extreme heat. Acknowledging the urgency of the situation, the government has developed plans and strategies to prevent further increases in electricity prices during this crisis period.
In conclusion, President Marcos Jr.’s announcement regarding the temporary suspension of WESM operations during red alerts is a proactive measure to mitigate the anticipated increase in electricity prices. By taking this step, the government aims to alleviate the burden on consumers amidst the challenges posed by the El Niño phenomenon and the recent power outages. The commitment to monitor the situation closely and implement strategies to stabilize prices demonstrates the government’s dedication to addressing the electricity crisis and ensuring affordable and reliable power supply for the people of the Philippines.
Source: The Manila Times
