THE Energy Regulatory Commission (ERC) has set the ceiling price for the power reserve market at P25 per kilowatt-hour (kWh), subject to review every five years.
The agency adopted a reserve offer price floor of P0 per megawatt-hour (MWh) and a cap of P25,000 per MWh, according to a document posted on its website.
The reserve market allows the system operator to buy power reserves from the wholesale electricity spot market (WESM) — the trading floor of electricity — to meet the reserve requirements of the energy system.
These reserves are services needed to maintain balance in the power system to ensure normal frequency and voltage levels in response to demand changes, variability of renewable energy and a possible loss of a large generating unit, according to the Energy department.
“The interim offer price floor and cap shall be reviewed and recomputed one year after its implementation, contingent on the collection of sufficient data from the annual submission of generation companies,” the ERC said.
The commission said it would review the offer price floor and cap every five years, or earlier when needed. The full commercial operations of the reserve market started in January.
The Energy department temporarily imposed a price cap of P32,000 per MWh, which is equivalent to P32 per kWh, and a price floor of P0 per MWh. The ERC, however, deemed the offer ceiling “excessive.”
In March, the ERC suspended the operations of the billing and settlement of the reserve market after the significant price increases in reserve costs for the month.
The commission ordered the settlement of 30% of the amounts in May to allow power generators to partially recover their costs.
The ERC then lifted the suspension in July to pave the way for the resumption of reserve trading for contracted and merchant plants.
But it ordered the Independent Electricity Market Operator of the Philippines to recalculate the amounts for the February and March billing periods.
Earlier this month, the ERC allowed the recovery of the remaining 70% or P3.05 billion for power generators that supplied the reserve market during the period, which will be collected from consumers starting next year. — Sheldeen Joy Talavera