The Energy Regulatory Commission (ERC) expects the downward trend in wholesale electricity prices to continue this year with the entry of more power plants.
“If the downward trend continues, then, yes, we should expect lower power bills this year especially as capacity increases with entry of new players,” ERC chairperson Monalisa Dimalanta said.
“We are monitoring closely the impact of El Niño as well as use of imported LNG of the gas plants that used to fully rely on Malampaya. These are two factors that could have adverse impact on pricing even as we assure continuous power supply,” Dimalanta said.
ERC noted a downtrend in Wholesale Electricity Spot Market prices after completing its review of the trading recorded in the trading floor of electricity in 2023.
Based on the ERC market analysis released in January 2024, the average effective spot settlement price (ESSP) declined across all grids (Luzon, Visayas, and Mindanao) at P6.505 per kilowatt-hour (kWh) by the close of 2023. The ERC said this was lower by more than P1 compared to the average ESSP in 2022 of P7.885 per kWh.
The ESSP is the indicative effective price paid by large consumers and distribution utilities for their purchases from WESM for each billing month.
It said the increased economic activity and easing of lockdown restrictions in 2021-2022, occurring with the disruption in global fuel supply brought about by the conflict in Ukraine, pushed WESM prices upward in 2021-2022.
The entry of new capacity in 2023 contributed to the positive development of lower rates at the spot market, it said.
About 35 generation companies utilizing renewable energy (RE) technologies were added as WESM trading participants, resulting in additional capacity of 749 megawatts as of December 2023.
The ERC said the entry of more RE sources in the energy landscape posed a significant impact on the increase in average supply for 2023, reaching 15,645 megawatts or a 17-percent increase from the 13,375 MW average supply in 2022.
“While there was nine percent increase in demand in 2023, the additional supply appears to have met such demand and resulted in a substantial 18 percent decrease in average prices compared to 2022,” the ERC said.