Electricity & Energy Business w/ Blend of Computers, Internet, Gadgets, Etc.

NPC/PSALM Cannot Deny their Power to Control the Price of Electricity

Nearly one and a half weeks after the implementation of WESM in the Philippines, we predicted, base from the available data and statements of energy officials, that Napocor will surely loss from power sales in the new power industry set-up. We also analyzed that NPC, given its huge generation capacity, has an ability to control the price of electricity in the market either lower or higher.

Although Napocor earlier confirmed that they loss almost P1 billion from its first month of participation in the WESM, they baselessly denied that NPC was not influencing the electricity price in the spot market. However, how could NPC deny that they don’t have a control on the market price if;

1.) NPC/PSALM is the only active bidder in the market. Other participants has a bilateral contract.
2.) The combined capacity of NPC and NPC - IPP(bid through PSALM) power plants is so large that it is almost capable of supplying the demand of the Luzon Grid. That is why EPIRA on Sec. 45 (a) states that no company can own, operate, or control more than 30% of the installed capacity of the grid.
3.) NPC’s so called, “self-correcting mechanism” coinsides with the increasing trend of LWAP in the market. Observe the trend of the Luzon Load Weighted Average in the following figure. (Courtesy of http://asianenergyadvisors.com)