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WHAT WENT BEFORE

01:16 AM August 04, 2016

In late 2013, a power supply shortfall forced Manila Electric Co. (Meralco) to buy supply from the Wholesale Electricity Spot Market (WESM) where prices had surged.

Prices at WESM went up following the shutdown of the Malampaya gas pipeline for maintenance from Nov. 11 to Dec. 10, 2013. A number of power generation plants also shut down during the period.

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WESM is the mechanism through which power distributors, like Meralco and rural electric cooperatives, buy additional electricity at lower prices from power-generating companies.

Noting the impact of the Malampaya maintenance shutdown and WESM price spikes, Meralco announced a rate increase of P4.15 per kilowatt-hour (kWh) in the December 2013 bill.

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Several groups, however, including the Makabayan bloc in Congress, questioned the rate surge. On Dec. 23, 2013, the Supreme Court issued a temporary restraining order (TRO) that kept generation rates steady.

In March 2014, the Energy Regulatory Commission (ERC) issued an order for the recalculation of the rates on the spot market after finding that prices at the WESM during the Malampaya shutdown could not qualify as “reasonable, rational and competitive.”

In April 2014, the high court issued a new TRO that prevented Meralco from collecting increased power charges. It extended indefinitely a previous TRO.

Following the price spikes in 2013, regulatory price caps were set in place to prevent price shocks in the spot market while the ERC looked into whether price fixing took place and/or how WESM may have been manipulated.

In November 2014, Philippine Electricity Market Corp., the operator of WESM, said its investigation of unusual increases in electricity prices in 2013 did not find evidence of price manipulation but only violations, committed by some companies, of rules governing transactions at WESM. Inquirer Research

Source: Inquirer Archives

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