Investors eyeing to stake precious capital investments in the Mindanao grid are joining the growing chorus for government to finally move for the establishment of a Wholesale Electricity Spot Market (WESM) in Mindanao.

Apart from installing an alternative market for forthcoming power capacity, the spot market will also serve as price trend-setter for the grid, given investors’ dilemma of not being able to match the relatively cheap price of power from the hydro facilities.

All prospective investors agree on assumptions that Mindanao already need to diversify on its fuel use; hence, the need for coal or oil-based power facilities in the area.

The grid rate of P2.8459 per kWh in Mindanao though would be very difficult to match; so without an entity setting price trends, investors will always be reluctant to cough up capital even with government’s ardent invitation for fresh investment flows to satiate the area’s power supply.

With the proposed fuel diversification, it was noted that the rates for new entrants may range from P4.00 to P4.50 per kilowatt hour (kWh) or may even be higher depending on the fuel to be utilized for the plants.

Former Energy secretary Francisco L. Viray noted that the establishment of WESM-Mindanao is highly necessary at this point, so price signals can be established for investors wanting to put up capacity on diversified fuel.

The call for the setting up of the proposed third spot market must come or be done simultaneously with the much-anticipated commercial operation of the Visayas WESM. An initial integration of the Luzon and Visayas spot markets has also been propounded.

Global Business Power Corporation president Jesus N. Alcordo recommends to market operator Philippine Electricity Market Corporation (PEMC) “to review the WESM operations and to correct whatever problems it may have and install it in the Visayas and Mindanao.”

Aboitiz Power Corporation president and CEO Erramon I. Aboitiz also backs the proposal, noting that having electricity spot markets in both grids would be “very important for power producers so they can have channel to sell their power, in an open and transparent manner.”

He added that if there would be pricing benchmarks, power investments will come because what they have been avoiding under the current setup is being unduly blamed for having pulled up the rates.

“It’s crucial that the WESM in Visayas will open as soon as possible and the WESM in Mindanao to open as soon as possible – that is going to be the signal for major power producers to build… without that, it would be a problem,” he stressed.

Policymakers are also reminded that power plants have long gestation period and it is not a matter that can just be resolved over several months stretch. Policy viability, they noted, will remain the ultimate measure that can entice fresh round of capital for power projects.