OPINION | Ten trends in global and Philippine energy By Bienvenido S. Oplas, Jr. READ:
By Bienvenido S. Oplas, Jr.1. Oil and gas prices are now lower than during pre-war Ukraine. Comparing prices last week with Feb. 23, 2022 or a day before Russia invaded Ukraine, Dubai crude is $11/barrel cheaper and WTI crude is $17 cheaper. It’s the same trend for EU gas and US natural gas prices.Coal prices have significantly cooled down. From a peak of $458/ton in 2022, it was down to only $245 last week.
Government price control in the electricity spot market is wrong and should be removed. Frequent price spikes are indicators of thin reserves, and power distributors and consumers are willing to pay higher just to avoid blackouts. When price control kicks in too often, it will discourage investment in more peaking plants. The most expensive electricity is no electricity. Candles and more expensive generator sets are bad alternatives.
Current UC-ME is P0.178/kWh and Napocor is asking for P0.15 more. If approved, it will become P0.328/kWh. The UC-ME should go, off-grid provinces should use small coal or gas plants or small modular reactors to have cheaper electricity and will not need subsidy. Note also in table 2 below, Napocor is earning P2-3 billion a year.
Meanwhile, South Premiere or the Ilijan gas plant is on economic shutdown. So far, there seems to be no investigation for anti-competitive behavior. Ilijan must run on liquid fuel, expensive diesel and generation companies have to obey the must-offer rule in the spot market. The plants have to run. There is an ongoing fourth regular review and fifth regulatory reset of NGCP at the ERC. ERC should look at these profitability figures.BusinessWorld
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