WESM Operational Results for April 2008

As expected, spot prices in the market for the summer month of April breached the Php3,000-per-megawatt level all the way to test the Php4,000-per-megawatt mark. However, what is perplexing is that spot volume went up despite expectations of higher prices in the Philippine wholesale electricity spot market (WESM).

Was this due to scarcity of bilateral or hedging contracts in the market that's why traders were forced to get their imbalances from the market? Or was this a result of over-contracting by some spot buyers which aim to resell excess energies in the WESM in the hope of gaining some profits on the difference between the contract price vis-a-vis spot market price?

As you can see from the chart, total energy volume passed the 3,500-gigawatt-hour barrier. The figure is currently the all-time peak since WESM inception. Bilateral volume increased in value in terms of number of quantities, whereas spot volume ratio to total energy volume also increased in numbers.

We may expect that the bullish trend will continue next month, unless monsoon rains would come early to provide cooler atmosphere in May.