No need to suspend electricity spot market at this time, says ERC chief

THE country’s electricity spot market is in full operation and there is no need to order a suspension at this time, the Energy Regulatory Commission (ERC) said over the weekend.

The agency was referring to the Wholesale Electricity Spot Market (WESM), the country’s trading floor of electricity. It will continue to operate amid the government’s declaration of a State of Public Health Emergency throughout the Philippines (Proclamation No. 922) for the management of the Covid-19 pandemic.  

A working WESM ensures all distribution utilities (DUs) a standby source of power supply and provides continuous electricity.

“The Commission has been closely monitoring the activities in the WESM and there is no breach in the criteria or parameters that would warrant the declaration of a market suspension at this time,” said ERC Chairman and CEO Agnes VST Devanadera.

Besides, a market suspension will only result in higher administered prices because these will be based on prices during the previous four weeks, which is relatively higher.  

According to the Department of Energy (DOE), electricity demand plunged by about 30 percent because of the enhanced community quarantine to contain the spread of Covid-19.

In a text message, DOE Secretary Alfonso Cusi said residential demand increased but commercial demand decreased. “For instance, March 16. The actual available supply was 13,000megawatts (MW) while demand was 9,500MW. The net effect is that the reduction in commercial is greater than the increase in residential demand,” explained Cusi.

The National Grid Corporation of the Philippines (NGCP) has reported to the ERC that electricity demand is basically low and that the Luzon grid is in a normal state.  It was also affirmed that WESM is implementable and operating in full swing, thus the declaration of a market intervention is still unlikely.

The ERC further noted that the WESM prices have been declining during the past days due to lower demand on account of the community quarantine being enforced, thus it is expected that lower resulting prices will continue which will redound to the benefit of the consumers. 

Also, system operator (SO) National Grid Corporation of the Philippines (NGCP) and market operator (MO) Philippine Electricity Market Corporation (PEMC) have assured the ERC they can fulfill their duties. 

“We also got assurance from both the MO and the SO of their abilities to continue their operations amid the nationwide Community Quarantine,” added Devanadera.

The SO and PEMC-MO have both submitted to the ERC their respective Business Continuity Plans considering the current Covid-19 situation. The PEMC-MO is currently implementing Risk Scenario 1 or the “business-as-usual” despite the current situation. Also, the ERC said there is close coordination with the IATF-EID being implemented and Market Advisories will be provided to all Trading Participants and Stakeholders containing status updates on the Market Operations.

“We will be in constant coordination with the SO and the MO to ensure that we are kept informed and advised accordingly of the situation of the Market in the light of the current Enhanced Community Quarantine being implemented in Luzon and in other parts of the country,” Devanadera added.

The ERC may suspend the operations of the WESM or declare a temporary failure thereof, particularly in cases of national and international security, emergencies or natural calamities, pursuant to Section 30 of Republic Act No. 9136, or the Electric Power Industry Reform Act (EPIRA) of 2001.

Meanwhile, the ERC has approved the suspension of the collection of Feed-In Tariff Allowance (FIT-All) for one month covering the next billing cycle.

“The Commission ordered the suspension of the FIT-All collection to provide some economic relief to the majority of electricity consumers who are mostly daily wage earners. With the ongoing lockdown situation, most of them were imposed a forced unpaid leave, reduced working hours, or no work-no pay arrangement.  The FIT-All suspension will mean a P0.04/kwh reduction in the electricity bill,” Devanadera said.

The suspension benefits some 19.16 million electricity consumers in Luzon, Visayas, and Mindanao.

The ERC said the suspension will not affect RE (renewable energy) developers’ viability as the FIT-All fund has an available balance to service its obligations for the said period of suspension, and the National Transmission Corp. (TransCo) is ordered to continue with the payment of FIT obligations to the FIT-eligible plants to ensure the sustainability of its operations.  

On-grid consumers being supplied with electricity through the transmission or distribution network share the cost of the Feed-in Tariff through the FIT-All, pursuant to Section 2.5 of the ERC Resolution No. 16, Series of 2010 (FIT Rules).  

The FIT-All collections are remitted to the FIT-All Fund established and administered by TransCo which keeps the fund in a government financial institution.

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