Demand pushes electricity price in October

Demand Drives Up Electricity Prices in October IEMOP

The average price in the Wholesale Electricity Spot Market (WESM) surged to P4.54 per kilowatt-hour (kWh) in October, according to the Independent Electricity Market Operator of the Philippines (IEMOP). This significant increase from September's average price of P3.15/kWh was largely driven by a substantial rise in demand and several unplanned outages that disrupted supply.

The power market experienced an increase in demand, reaching 13,880 megawatts (MW) in October, up from 13,640 MW in September. Meanwhile, supply dipped to 19,889 MW, down from 20,712 MW the previous month. This imbalance led to a surge in prices, making it more costly for distribution utilities to purchase electricity from the spot market.

The increase in demand is typical of October, as economic activity tends to pick up in preparation for Christmas. However, this year's outages and force majeure events, such as typhoons and earthquakes, further exacerbated the situation, leading to higher prices across all island groups.

In Luzon, the average price increased by P1.39/kWh to P3.96/kWh, while in the Visayas and Mindanao, prices rose by P1.83/kWh and P1.68/kWh, respectively, reaching P5.85/kWh and P5.87/kWh.

IEMOP's Vice President for Trading Operations, Isidro Cacho Jr., attributed the price increase to a combination of factors. We experienced earthquakes and typhoons, which led to multiple outages, plant tripping, and generator shutdowns, he explained. The IEMOP's prompt response to these disruptions was crucial in preventing price spikes by implementing market suspensions that helped mitigate the impact on the power market.

While prices are expected to ease in the coming months as demand typically softens after October, the IEMOP remains vigilant against any potential outages or disruptions that could affect the market's stability.

In conclusion, the combination of increased demand and supply disruptions led to higher electricity prices in October. As we move forward into the remaining months of the year, it is essential for the power market to remain prepared to respond to unforeseen events that could impact its stability.

Keywords Wholesale Electricity Spot Market (WESM), Independent Electricity Market Operator of the Philippines (IEMOP), demand, supply, electricity prices, outages, force majeure events.

Edward Lance Arellano Lorilla

CEO / Co-Founder

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