Wesm March adjustments feared to trigger new power rate hike

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AdjustmentS in Wholesale Electricity Spot Market (WESM) rates estimated for March may trigger a fresh surge in power rates for April, especially for end-users of power distributor Manila Electric Co. (Meralco).

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WESM is where power utility companies source their supply through bidding, for distribution to consumers.

“We expect that there was upward pressure on spot market prices in March, which may affect the generation charge for April,” Larry Fernandez, Meralco Head of Utility Economics, said in a text message to reporters.

“We’re awaiting the suppliers’ bill now to assess the actual generation charge,” he added.

Fernandez explained that there was an increase in electricity demand from February to March of about 100 megawatts, coupled with the outages of some large power plants such as that of one of the units of Ilijan. This caused the spot market price during that period to go up.

Meralco rates eased for the second straight month in March, with consumers seeing a 45-centavo per kilowatthour (kWh) reduction in their electricity bills as the generation charge, along with other components of the monthly bill, registered downward adjustments.

Specifically, the bill of a typical household using 200 kWh a month on average has declined by about P90. Meralco attributed the reduction mainly to a 33-centavo per kWh decrease in the generation charge from P5.54 per kWh in February to P5.21 per kWh in March.

The decline in generation charge was primarily driven by the drop in the cost of power sourced from plants selling to Meralco under the Power Supply Agreements (PSAs).

While the cost of power sourced to the WESM posted the largest decline of 51-centavo per kWh, purchases from the WESM accounted for only 4 percent of Meralco’s requirements during the period.

From P5.41 per kWh during the January supply month, WESM charges fell to P4.90 per kWh in February as demand remained moderate and no major power plant outages were reported.

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