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SPOTLIGHT | 'Must-run' power plants and WESM rules

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MANILA - (UDPATED 10:06 a.m.) In the third round of the oral arguments on the power rate hike, Supreme Court justices have touched on another rule or procedure that should foster competitiveness among players of the Wholesale Electricity Spot Market (WESM): the 'must-run' protocol.

'Must-run' is a power grid protocol where the system operator--which is the National Grid Corp of the Philippines--compels a plant to run during times of deficiency. When a 'must-run' unit is called, it must operate as soon as possible and will be paid the corresponding rates, whether it is higher than the norm.

However, during the shutdown of the Malampaya gas field and the repair works on a number of major power facilities late last year, Energy Secretary Carlos Jericho Petilla claimed that demand never reached supply--part of the reason why the Malaya Thermal power plant was not utilized by the grid.

Under Section 30 of the Electric Power Industry Reform Act, the Department of Energy must make sure that there is reliable, quality and supply of electricity. On top of this, it has to ensure that there is transparency and reasonable price of electricity in a regime that is free and competition is fair.

Pursuant of this EPIRA section, the DOE created the WESM, a market that will facilitate a transparent, cometitive and reliable elctricity market in the country. It is a trading platform where power plant operators sell excess output.

Distributors like Manila Electric Co (Meralco) buy additional supply from WESM whenever demand is higher than what the utility contracted from power plant operators.

Prices at the WESM, however, spiked in November, reaching the market cap of P62 per kiloWatt hour, owing to the tight supply. Meralco wanted the high generating cost to be passed on to consumers.

Earlier, Petilla said market intervention is included in WESM rules, such as dispatching must-run plants when demand exceeds supply.

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