Napocor denies influencing spot market auction results
The Philippine Star 10/04/2006
State-owned National Power Corp. (Napocor) yesterday denied that it has been influencing the bidding at the wholesale electricity spot market (WESM) by submitting high bids.
In a press statement, Napocor said the changes in electricity prices of generators at WESM, such as the Napocor, are just part of the dynamics that govern the relationships of market participants. It is also an indication of the self-correcting mechanism in prices brought about by competition and deregulation – where rates approximate, if not reflect, the true cost of generation.
The power firm was reacting to allegations that it is bidding "high" to recover losses incurred in the past two months in the WESM, which could put an end to cheaper electricity for consumers.
Napocor earlier said it had incurred almost P1 billion losses from its first month of participation in the WESM
The state-owned power generation company also denied it has been engaging in any "bid low" strategies.
"On the contrary, Napocor has been consistently bidding well within its allowable rate-of-return. It is the market that dictates how much can be charged in a given bidding hour. This is the very essence of competition."
The power company said WESM records will show that it has been bidding in the spot market using electricity generation prices based on its approved revenue requirement.
As one of the major participants in the WESM, Napocor also explained there are many factors that affect prices in an open market.
"Trading in an open market such as the WESM depends on the strategies and decisions on electricity pricing by trading participants. These strategies and decisions tend to respond to real market situations," it said.
State-owned National Power Corp. (Napocor) yesterday denied that it has been influencing the bidding at the wholesale electricity spot market (WESM) by submitting high bids.
In a press statement, Napocor said the changes in electricity prices of generators at WESM, such as the Napocor, are just part of the dynamics that govern the relationships of market participants. It is also an indication of the self-correcting mechanism in prices brought about by competition and deregulation – where rates approximate, if not reflect, the true cost of generation.
The power firm was reacting to allegations that it is bidding "high" to recover losses incurred in the past two months in the WESM, which could put an end to cheaper electricity for consumers.
Napocor earlier said it had incurred almost P1 billion losses from its first month of participation in the WESM
The state-owned power generation company also denied it has been engaging in any "bid low" strategies.
"On the contrary, Napocor has been consistently bidding well within its allowable rate-of-return. It is the market that dictates how much can be charged in a given bidding hour. This is the very essence of competition."
The power company said WESM records will show that it has been bidding in the spot market using electricity generation prices based on its approved revenue requirement.
As one of the major participants in the WESM, Napocor also explained there are many factors that affect prices in an open market.
"Trading in an open market such as the WESM depends on the strategies and decisions on electricity pricing by trading participants. These strategies and decisions tend to respond to real market situations," it said.
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