Philippines Spot Electricity Prices Ease in July Amid Softening Demand

ELECTRICITY PRICES on the spot market fell in July as demand softened against ample supply, according to the Independent Electricity Market Operator of the Philippines (IEMOP). IEMOP said the average power rate on the Wholesale Electricity Spot Market (WESM) dropped 13.1% month on month to P8.31 per kilowatt-hour (kWh). IEMOP manages the WESM, where power firms can buy electricity when their long-term supply contracts fall short of meeting customer demand. In July, demand declined 3.4% to 14,936 megawatts (MW), keeping pace with the 2.6% drop in supply to 20,587 MW. Isidro E. Cacho, Jr., IEMOP’s vice-president for trading operations, said that though the cool weather brought about by the rainy season dampened demand, supply margins are still tight. “Electricity rates went down further this billing month compared to the previous one. We will see a decrease, especially in the Visayas, because during the June billing month, market prices were high and their exposure to the market was also high,” he said. For Luzon, WESM prices fell 8.2% to P7.30 per kWh. Supply decreased 3.9% to 15,043 MW while demand slipped 3.3% to 10,764 MW. Prices in the Visayas dropped 21.9% to P11.29 per kWh, as supply fell 3.6% to 2,260 MW and demand declined 4% to 2,080 MW. Mindanao electricity prices plunged 18.5% to P10.39 per kWh, as weaker demand outpaced a slight dip in supply. Demand fell 2.9% to 2,091 MW, while supply edged down 0.3% to 3,283 MW. While spot prices may remain elevated this month, Mr. Cacho said improved supply could help stabilize market prices in the Visayas. “We are seeing that margins will be much better in the Visayas by September, and those red and yellow alerts should already be gone. Historically, prices tend to decline as we move toward December, partly due to lower demand since weather is a major factor,” he said. The Visayas grid has been under a series of yellow alerts since May amid the forced shutdown of several power plants, which continue to persist. — Sheldeen Joy Talavera