THE average electricity spot market price dropped by 60 centavos in early July to P6.07 per kilowatt-hour relative to June levels as power demand declined.
“There is a downtrend in WESM (Wholesale Electricity Spot Market) prices and I think the primary driver is lower demand,” Isidro E. Cacho, Jr., IEMOP’s head of Corporate Strategy and Communications, said in a briefing on Wednesday.
The spot market is where energy companies can buy power if their long-term contracted power deals prove inadequate for their needs.
In July so far, average supply declined to 14,858 megawatts (MW) from 15,145 MW in June, while demand also fell to 11,486 MW from 11,641 MW last month, with a supply margin of about 2,935 MW, expanding from 2,909 MW previously.
Mr. Cacho added that lower spot market prices may continue for the rest of the month due to the sustainable supply margin.
“Our margin is stable so hopefully, that continues, then possibly we can see further lowering in prices. I think all these are good indications. There are improvements in terms of the outages and plant performance so hopefully they continue,” Mr. Cacho said.
For now, Mr. Cacho said that the only factor that may trigger a spike in spot market price is unplanned outages.
“Again, the factors that may result in high WESM prices, as always, are unplanned outages. Other than that, I don’t think there is a major issue,” he said.
“But so far, if there are no unforeseen outages, I think we will see a further downtrend especially towards the end of this year due to colder temperatures in the fourth quarter, unless El Niño becomes more intense,” Mr. Cacho added.
Meanwhile, Mr. Cacho said that IEMOP is on top of the reserve market trial operations, which are expected to be launched by September.
“Our certified AS (ancillary service) provider is in trial operations. Hopefully, we will finish this trial operations to prepare our market participants and AS providers to be familiar with the market system,” he added.
The Department of Energy said commercial operations of the spot market for power reserves are expected to launch in September.
The reserve market will facilitate the trading of ancillary services, or power reserves needed to support the transmission system.
“Hopefully, we can finish the (trial operation) before September and at the same time there is an ongoing review by the ERC (Energy Regulatory Commission) of the price determination methodology,” Mr. Cacho said. — Ashley Erika O. Jose