Energy vampires exist

Energy vampires exist | Daily Tribune

The government has avoided being pushed to the wall by the surging inflation even as rising food prices are exacerbated by spikes in electricity costs amid the high power demand brought by an unprecedented heat wave.

The suspension of the operations of the Wholesale Electricity Spot Market (WESM) whenever the system operator, National Grid Corp. of the Philippines (NGCP), declares a red alert provides a solution. Still, it is, at best, a stop-gap measure.

Unless the suspected manipulation of electricity is addressed, the perennial problem of short supply and high prices will recur yearly.

Control of the market is clearly in the hands of the dominant power plant operators, who not so long ago showed their capability of gaming the market for extreme gains.

An “administered price” is implemented by the spot market fixed during a massive supply shortage.

According to Energy Regulatory Commission (ERC) figures, red alert notices have reached unseen levels in the past few weeks.

The combination of failed or reduced operations of generation companies and the increase in demand resulted in frequent red and yellow alerts starting on 16 April.

A total of 20.46 hours of red alerts, thus far, were raised this year compared to none since 2021.

As a consequence, WESM figures showed that electricity prices increased by an average of 11 percent in Luzon and 53 percent in the Visayas during the red and yellow alert notices.

While the ERC attributed the shortage to a rise in demand during the heat index upswing, suspicions of possible collusion, which is extremely hard to prove, persist.

The shortfall in supply happened during a recent red alert when 50 power plants were suddenly idled or reduced their output when the demand peaked.

The WESM was created under the Electric Power Industry Reform Act (EPIRA) to bring down high electricity prices through competition, but this has not been achieved due to the small number of dominant players trading in the market.

Instead, WESM became a venue to maximize power generation income as power plants could declare a sudden malfunction to take their plants off the grid.

The electricity generated by the offline power plants is then sold through the WESM, including the backup electricity required by the supply contracts.

Extended outages are averted, but consumers have to shoulder increases in their monthly bills.

ERC Chairperson and CEO Monalisa C. Dimalanta said distribution utilities sourcing from the WESM must also proactively explore ways to lessen their exposure.

She said the impact of high prices can also be alleviated by existing programs, such as the Anti-Bill Shock Lending Program of the Land Bank of the Philippines, which allows consumers to pay the incremental increases in their electricity bill in installments.

The ERC said the suspension of the WESM shall be lifted only when the regional available capacity, less actual regional demand, goes above zero for 24 consecutive hours.

WESM’s failure to introduce competition and provide electricity users with the least cost is among the compelling reasons for amending the EPIRA.

For the past two decades that the EPIRA has been in effect, the scourge of high electricity prices has persisted. These prices have held households’ budgets hostage with high monthly bills and kept the investment climate poor.

EPIRA has one simple goal: to provide Filipinos with the least expensive electricity, but that has never happened.