WESM cap price dip to give ‘temporary relief’

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An economist said that the economy may benefit from the lowering of the price cap of the Wholesale Electricity Spot Market (WESM) from P62 to P32, but he noted that it might only give people “temporary relief” as the pricing is still exposed to volatility.

The WESM is the trading market of electricity power in the Philippines where suppliers, which are the power plants, and retailers such as the Manila Electric Co. (Meralco), negotiate electricity supply and pricing.

Alvin Ang, president of the Philippine Economic Society (PES), told The Manila Times that the lowering of WESM price cap still has “gaps that lead to price increases” and that the government should be able to take action to making electricity prices stable.

“In general, this should be positive for all [economy, industries and households] but we need to have a clear understanding of how pricing will work. [Government should] stop the gap that leads to price increases later on, [which]is not good. Besides, regulatory adjustments should be for transparency,” Ang said in a text message.


He said that the lowering of WESM prices would only provide “temporary relief.”

Energy Secretary Jericho Petilla proposed in a tripartite committee of Department of Energy, Energy Regulatory Commission and Philippine Electricity Market Corp. that the WESM price cap be dropped to P32, which the three entities agreed to.

The National Statistics Office (NSO) said last week that the Philippines’ most utilized power source is still electricity, accounting for about 74 percent of the total energy consumption of the country.

“About 87 percent of 21 million households used electricity from March to August 2011. The other sources used by a significant proportion of households include fuelwood, charcoal, LPG [liquefied petroleum gas]and kerosene with at least one-third of the total households using any of these types of fuel in 2011,” the NSO said.

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