Looking at Alfie’s graph, I’m reminded again of the potential problem in giving Meralco IPPs priority dispatch by bidding zero into WESM. They should be dispatchable just like everyone else.
Someone – either Meralco or its IPP, depending on the contractual terms – benefits from avoidable fuel expenditures at the IPP plant. If the market price of electricity, at the IPP node, falls below the equivalent cost of the IPP’s fuel, then one of the parties is leaving money on the table. And they are simultaneously taking it out of the pocket of another plant (most likely an NPC/PSALM plant) that would gladly accept a smaller amount of money to provide the same amount of electricity.
In such cases (let’s ignore minimum down times, ramp rates, and depth of market issues for the moment), either the IPP could save money by shutting down the plant and buying from the spot market to meet its delivery obligation to Meralco OR Meralco and its ratepayers could save money by shutting down the plant and buying from the spot market.
If the existing IPP contract is preventing one or both parties from unilaterally doing that, then for heaven’s sake, get together in a room and figure out how to split those savings among the two parties and change the contract!
Why would anyone be against that? Except maybe the IPP’s fuel suppliers.