CUSTOMERS of Davao Light and Power Co. Inc., an AboitizPower subsidiary, may experience lower electricity bills due to the distribution utility’s participation in the Philippine Wholesale Electricity Spot Market (WESM).
Mandated by Section 30 of Republic Act 9136, otherwise known as the Electric Power Industry Reform Act (EPIRA), “Subject to compliance with the membership criteria, all generating companies, distribution utilities, suppliers, bulk customers/end users and other similar entities authorized by the ERC shall be eligible to become members of the wholesale electricity spot market.”
The WESM is a centralized venue for buyers and sellers to trade electricity as a commodity where prices are determined based on demand and supply. On May 4, 2017, the Department of Energy (DOE) promulgated DC No. DC2017-05-0009 titled, “Declaring the launch of WESM in Mindanao and Providing for Transition Guidelines effective June 26, 2017, to provide sufficient time for the Market Operator, System Operator, and WESM Participants to prepare and finalize themselves in WESM operations.”
According to Engr. Erick George D. Uy, science research specialist II of the Department of Energy (DOE)-Mindanao, “Based on our Mindanao Supply-Demand Outlook for 2023, including our assumptions for the DOE-approved Grid Operating Maintenance Program (GOMP) 2023-2025, Forced Outages, and Committed Power Projects, Mindanao won’t be expecting any “Yellow or Red Alert” for the Mindanao Grid.”
Before WESM was implemented in Mindanao, distribution utilities like Davao Light depended on their contracts with generation companies to satisfy the customer’s demand. Even if there’s an oversupply of power in Mindanao, when there are plant outages with the contracted generators, Davao Light does not have access to the excess power supply because they don’t have contracts with these plants. Thus, WESM provides this avenue to buy power at a competitive price even if power utilities don’t have bilateral contracts with generation companies.
Moreover, bilateral contracts are necessary to guarantee that there is enough power supply. However, in the event that these contracts cannot accommodate the demand of Davao Light customers, then Davao Light would have the option to purchase from WESM, especially if the price is lower. According to DOE, the average WESM Mindanao Price (January 26 – April 16, 2023) is at ₱5.4/kWh.
Lastly, WESM opens the market to encourage competitive pricing of power from generation companies in the Philippines. “We’ll rely on our contracted suppliers, but we will take advantage of WESM when their prices are lower. What’s important is that we’d be able to give the optimum rates to our customers,” Rodger Velasco, the President, and COO of Davao Light, said in a statement.
Davao Light started buying from WESM in February 2023, so lower electricity rates in the following months as WESM is still a cheaper alternative source of electricity supply. For July, Davao Light’s rate is Php 8.75 per kWh.
Davao Light aims to provide its customers with a front-seat vantage point regarding its services, including the sourcing and pricing of its electricity. This is in line with the mission of the company to deliver, at the most reasonable cost, safe and reliable electric service to the people and businesses it serves.
