Energy Regulation Changes to be Implemented to Protect Consumers from Price Spikes

In an effort to provide better safeguards for consumers from unreasonable price spikes, the Energy Regulatory Commission (ERC) is set to implement amendments to the price mitigating measures in the wholesale electricity spot market (WESM). This move is especially important as the market continues to experience tight supply.

Some of the most notable changes are centered around the Cumulative Price Threshold (CPT) and the imposition of the Secondary Price Cap (SPC) mechanism.

The ERC is aiming to lower the rolling average period from five days to three days. Additionally, an SPC of ₱6,245 per megawatt-hour (MWh) will be enforced after the rolling price average of ₱9,000 MWh is breached over the three-day period. This will significantly prevent the repetition of excessive and exorbitant market prices.

“Because of the imposition of the SPC in May 2021, the average price in WESM was at P7,428 per MWh instead of P8,120 per MWh. That is for the five days rolling average. If reduced to three days rolling average, resulting price would have been P6,338.66 per MWh,” explained ERC Chairperson and CEO Agnes Devanadera.

Moreover, a regional/island SPC mechanism is also being considered by the ERC which will be applied when there is an outage on the grid interconnection and similar conditions. This will have the same SPC value, CPT, and rolling average period of the system-wide implementation.

According to the Independent Electricity Market Operator of the Philippines (IEMOP), the lack of supply in the grid triggered generator outages reaching as high as 2,396 MW and deratings of 4,984 MW. This is why yellow and red alert warnings were prompted during May and June.

These important changes will be indicated in an amended resolution which the ERC will publish in the coming days, said the power regulator.

Source: PhilStar