Electricity spot market system completes final test

The Philippine Electricity Market Corp. (PEMC) reported that the factory acceptance test (FAT) for the Market Management System (MMS) of the Philippine Wholesale Electricity Spot Market (WESM) was completed at the Asea Brown Boveri (ABB) offices in Sta. Clara, California.

PEMC president Lasse Holopainen said the $8.47-million MMS consists of the software and hardware needed to operate the WESM once trading begins.

Holopainen said the testing began on Oct. 1 for the performance of 662 structured and unstructured tests, with most of the variances on the tests resolved.

The PEMC chief said there are still two significant variances which remain unresolved as of the end of the tests but he said the contractor, ABB, is undertaking the necessary steps to resolve these prior to the site acceptance test. As such, these should not cause any delays on the WESM implementation schedule.

The completion of the FAT marks a significant milestone in the evolution of the WESM and is a precursor to the delivery of the final system, which is anticipated to arrive in the Philippines by early December. Representatives from the Department of Energy (DOE), Energy Regulatory Commission (ERC), National Transmission Corp. (Transco) and PEMC, as well as MCo (the MMS project manager) participated in the FAT.

"Despite our aggressive timetable, the FAT team and ABB have done an incredible job of identifying, isolating and resolving problems in the system, which is custom-built to Philippine WESM rules. The Market Operations – Transco group and other DOE representatives performed superbly during the tests and kudos is due them for their professionalism, commitment and effort during the process," Holopainen said.

With the successful conclusion of the FAT, Holopainen said the WESM remains on track to begin market trials before the June 2005 deadline set by the Philippine government.

The final date for the start of market trials will be announced after the November PEMC board meeting.

Formed in November 2003, the PEMC is a non-stock, non-profit private-government partnership tasked to govern the Philippine WESM.

The Arroyo administration plans to allocate P1 billion in the 2005 budget for the implementation of the WESM.

The implementation of the WESM is expected to lead to lower power rates. Based on estimates, it is expected that the electricity cost will go down by about 40 centavos per kilowatthour once the WESM is established.

If implemented properly, WESM will empower consumers to choose their supplier of electricity with the main goal of purchasing the least cost of power.

The creation of the WESM is likewise expected to result in higher efficiency of service, transparency in the generation charges and in the long term help reduce power rates.

The WESM rules govern the operation of the spot market by providing a mechanism that will identify and set the price of electricity between sellers and purchasers of power.