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In response to the escalating heat index and the subsequent rise in electricity demand, the Energy Regulatory Commission (ERC) has taken decisive action. The ERC has mandated a temporary halt Wholesale Electricity Spot Market (WESM) operations in Luzon and Visayas during instances of Red Alert.
Why halt WESM Operations?
The ERC’s decision was triggered by a series of Red Alert notices issued in recent weeks due to a significant increase in demand due to the high heat index. This suspension is in line with the ERC’s powers under Section 30 of Republic Act No. 9136, also called the “Electric Power Industry Reform Act of 2001” (EPIRA), which allows the ERC to suspend WESM operations in cases of national and international security emergencies or natural calamities.
During the period of market suspension, the Administered Price will apply. If a dispatch interval is subject to both a price mitigation (such as the Secondary Price Cap) and the Administered Price, the lower of the two prices will be used in the settlement of transactions for such interval.
The ERC’s move comes as the Luzon and Visayas grids have been experiencing Red and Yellow Alerts since April 16, 2024. Data from the WESM for the periods when the high heat index was recorded and alert notices were issued show that the average prices per day increased by an average of 11% in Luzon and 53% in Visayas. These increases would have a significant impact on consumers’ electricity bills.
The ERC’s Role
Monalisa C. Dimalanta, ERC Chairperson, and Chief Executive Officer, was quoted as saying, “The Commission is working doubly hard to alleviate the impact of El Niño on our power system, and we are finding ways to mitigate the impact of the extremely high demand resulting from the high heat index as these ultimately affect our consumers.”
This decision by the ERC is a proactive measure to control power costs and protect consumers from price spikes during periods of high electricity demand. It is a clear demonstration of the ERC’s commitment to ensuring the stability of the power system and the affordability of electricity for consumers in Luzon and Visayas.
Source: ERC Suspends Market Operations during Red Alert in Luzon and Visayas