Having lodged their complaint-letter batting for an investigation of alleged market power abuse at the Wholesale Electricity Spot Market (WESM), utility giant Manila Electric Company (Meralco) along with Dagupan Electric Corporation (DECORP) asked market operator Philippine Electricity Market Corporation (PEMC) to declare market failure for February 2010 supply month due to drastic spikes in prices at the spot market during the period.

“After a review of the WESM-provided statistics for the February 2010 billing period, we respectfully request that the PEMC look into the possibility of declaring market failure of the WESM during the February 2010 billing period, leading to the application of administered prices,” the two utilities have indicated in their correspondence addressed to PEMC president Melinda L. Ocampo.

In the same letter signed by Meralco president Jose P. de Jesus and DECORP chief executive officer Deon Peter James, the Meralco-DECORP tandem also brought to PEMC’s attention raps of alleged market power abuse in view of cleared prices hitting as much as P55 per kilowatt-hour in some trading intervals during the month.

“We are also respectfully requesting PEMC to take appropriate actions to address concerns about the possible occurrence of anti-competitive behavior and/or market power abuse during the same and succeeding periods,” they averred.

PEMC, however, noted that there is a clear market rule on a price cap which should be P60 per kWh, and so far, the market operator stressed that “no trader or player has breached that.”

The WESM operator likewise emphasized that the price spikes happening in the spot market as triggered by predicaments of supply tightness shall serve as a lesson or be seen as signal by distribution utilities to shield themselves from price volatilities, hence, the more pressing need for them to seek out bilateral contracts or what are termed as bilateral contract quantities (BCQs) in the market.

In a chance interview, Ocampo said that the “power of investigation rests upon the ERC (Energy Regulatory Commission),” yet she has not given any categorical response on how PEMC will deal with the joint complaint of Meralco and DECORP.

Nevertheless, on Meralco’s part, it want the recent developments to catapult moves of reviewing the WESM Rules so they would be more attuned to the needs of the market and also in widening the base of industry competition.