Tell it to SunStar: WESM? Be careful what you wish for

Jaydar Medrozo, Power lead campaigner
·2 min read

We at People’s Oversight Watchdog for Energy Reforms (Power) are advocating for the reduction of the cost of power to protect households and spur economic growth. We hope to achieve this through our Education, Empowerment, and Participation (EEP process) of electric power consumers into the discussion on rates, contracting, and services provided by power industry players.

In solidarity with the Cebu Chamber of Commerce and Industry (CCCI), we join them in its efforts to have government agencies review the energy supply contracts of Visayan Electric Co. (Veco). We believe that we consumers have the right to know and understand what we are paying for. The supply contract with Cebu Private Power Co. (CPPC) must be thoroughly reviewed and explained considering the price of the contracts and the owners involved.

However, we disagree with the chamber in its proposal to ask Veco to buy more energy from the Wholesale Electricity Spot Market (WESM) as this could be very dangerous. The spot market prices could fluctuate dramatically, especially when supply is tight and demand is high; demand is historically at its highest in the dry months of April to June.

The exclusive supply contracts of Veco with its suppliers give us consumers a sense of security as the prices are more or less fixed. Spot market prices go down and up and are dependent and influenced by the availability of power plants in Luzon and Visayas (they undergo scheduled or unscheduled shutdowns), the actual demand for power, natural calamities, national security, and yes, even politics.

Though current WESM prices average at around P3 or P4 per kwh, it is still fresh in our memory when WESM prices spiked at around P32/kwh, even P64/kwh during some intervals in 2019 due to the shutdown of Malampaya power plants and the mysterious simultaneous shutdowns of several major power plants in Luzon. This prompted the government to suspect collusion among power generators in Luzon. Hundreds of millions of pesos of fines were levied on the guilty generators. Among those fined was Aboitiz, who is the majority shareholder of Veco.

So while looking into current supply contracts is critical, wishing that WESM is the answer to the expensive power in Cebu, could be treading on dangerous ground for all of us. This should be thoroughly studied and the Chamber must open its doors for more discussion and insights on the matter.

Again, we in Power promote what is best for the consumers and industry players alike. Strong partnership with industry players and consumers will ensure protection and continuous accountability and transparency.