ERC mitigates WESM price spikes
The Energy Regulatory Commission (ERC), on August 11, 2008, ordered the suspension of the implementation of Section 3.5 of the Rules for the Default Wholesale Supply Arrangements (DWSA) in the Wholesale Electricity Spot Market (WESM) to mitigate the effects of congestion in the transmission network prevailing in the recent weeks. The ERC’s action tempers the impact of the high WESM prices brought about by such transmission congestion by reducing the distribution utilities’ (DUs) supply imbalances that will be settled based on the WESM prices. With the suspension of Section 3.5, DUs, even those that are direct WESM members, are allowed to procure from the National Power Corporation (NPC) up to 120% of their contracted volume under their Transition Supply Contracts with NPC, which they will settle using the ERC-approved NPC-TOU (Time of Use) rates. This effectively reduces the volume of energy that will be procured from the WESM. “The ERC is suspending the application of Section 3.5 of the Rules on Default Wholesale Supply Arrangements (DWSA) to ensure that the DUs’ exposure to the price volatilities of the market is minimized,” ERC Chairman Zenaida G. Cruz-Ducut said.
The suspended Section 3.5 of the Rules on DWSA provides that: “Any Distribution Utility (DU) with an existing TSC with NPC, which opts to become a Direct WESM member, shall no longer be subject to the twenty percent (20%) bandwidth as stated in its TSC with NPC. All quantities beyond the one-hundred (100%) contracted level in the TSC and the contracted quantities from the other Bilateral Power Supply Contracts, if there are any, shall be deemed taken from the WESM.” The suspension of Section 3.5 of the DWSA will be in effect until such time that the transmission congestion triggered by the outages of the San Jose – Tayabas EHV Line 2 and San Jose Transformer 2 have been addressed by the TRANSCO or when the transfer of one (1) 600 MVA transformer from Kadampat to San Jose Substation is completed.
“Rest
assured that the ERC will be responsive and timely in taking actions where consumer
welfare is at stake,” Chairperson Ducut concluded.
August 22 , 2008