Refund predatory gains

In an environment of a few dominant players in an increasingly lucrative market due to the progressively high demand, power plants have been bogging down instead of providing increased stability to the power supply network.

The Energy Regulatory Commission (ERC) said it is investigating the phenomenon of sudden shortfalls whenever demand peaks. Electricity users are thus hoping that the probe will conclude soon.

The ERC is looking into the recent series of red and yellow alerts from system operator National Grid Corporation of the Philippines that resulted in price spikes at the Wholesale Electricity Spot Market (WESM).

Suspicions are rife that the market is being gamed through supply manipulation that artificially inflates the bids at the spot market. Regarding the April shortfalls, ERC said it questioned six generation companies.

The regulator promised the preliminary results of its probe will be made public soon. ERC raised the possibility of show-cause orders being issued, “in view of possible violations of outage allowances.”

The regulator reminded those under probe that in 2023, P60 million in penalties on 14 generation companies were meted out for breaching the allowable number of outage days.

It added that 95 generation companies remain under investigation for exceeding the outage allowances under an ERC resolution “to determine if these outages are justified or excused under the regulation.”

Recently, some 50 power plants either crashed or had reduced output during periods when demand was at its highest.

The coincidences are attributable to the effects of the hot weather or the strain on the system during peak demand but the capacity should be enough to sustain the high requirement.

WESM data showed the average prices for the Luzon grid increased by 47 percent between 15 and 21 April compared to the average prices from 8 to 14 April.

When compared to previous years, the average price increased by two percent compared to the same period in 2023 and increased by 47 percent from 2022.

Average WESM prices for the Visayas also increased by 14 percent during the comparative periods.

When compared to previous years, the current average prices are consistent with those posted in 2023 but reflect a 13-percent increase when compared to the average prices from 2022.

The ERC said the primary agenda of the probe is to protect the interest of consumers.

ERC Chairperson and CEO Monalisa C. Dimalanta said, “While we are completing our investigation into the outages, we are not losing sight of the fact that consumers — households and businesses alike — will bear the brunt of unavailable supply and/or high WESM prices.”

The key to the probe are the power supply agreements that are always under siege during opportune periods.

ERC has “emphasized to distribution utilities the importance of contracting for power supply to at least avoid exposure to price spikes in the WESM.”

Power plant operators made a killing during the peak of the power shortfalls before President Ferdinand “Bongbong” Marcos Jr. ordered a suspension of spot market trading when NGCP declares a red alert.

If ERC finds that the power companies are gaming the system, it must order a refund from the years the inordinate profits were amassed.

Power companies, as utility firms, have a guaranteed profit margin through the so-called pass-through provisions in their contracts under which consumers are billed for their expenses.

Raking in obscene gains from the WESM during periods of great want is monstrous greed.