Wholesale electricity spot market ready for comm’l operations

Energy Secretary Raphael P.M. Lotilla commended yesterday the Philippine Electricity Market Corp. (PEMC) for ensuring that the country’s wholesale electricity spot market (WESM) is now technically and institutionally ready to start commercial operations.

"We appreciate the hard work PEMC has done to bring the WESM into its current state of readiness. The PEMC board, composed of electric industry players, its president Lasse Holopainen, and the PEMC staff have all worked hard together to achieve this milestone in our continuing efforts to reform the power industry," Lotilla said.

Lotilla said the WESM can start commercial operations anytime after Jan. 25, 2006 as soon as the Energy Regulatory Commission (ERC) approves the price determination methodology (PDM) for trading at the WESM.

"We welcome the scheduling of hearings by the ERC on the PDM and the market fees so that any concerns can be addressed immediately," Lotilla said.

Lotilla said he is optimistic that all the possible regulatory issues will be resolved to enable the country to realize lower electricity rates.

"Once WESM is in place, we are on our way to empowering consumers to choose their electricity supplier from the least cost source," Lotilla added.

Energy Undersecretary Melinda Ocampo, a former ERC chief, has also affirmed the hard work done to bring WESM into its current state of readiness.

Besides the technical and institutional preparation, she cited the January 2003 application for approval of the PDM with the ERC and subsequent public consultations, which became the basis of the ERC approval in concept of the fundamental principles of the PDM in March 2004.

The ERC approval was the basis for PEMC to develop the now completed software for WESM pricing and dispatch framework. Several rounds of compliance with further ERC orders were subsequently undertaken by PEMC until early this year.

Ocampo expressed unity of purpose with the regulator and industry stakeholders in realizing the immediate commercial operation of WESM as set under the Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA) which is expected to redound to the benefit of consumers and private investors.

EPIRA, which restructures the power sector, mandates the establishment of the WESM.

Under the WESM, electricity will be traded as a commodity at the spot market, wherein generators will compete against each other to supply power to the grid.

The WESM will act as the central coordinator of the "pool" for all electricity output from generators.

The SEC-registered PEMC is mandated to establish and operate the market for the wholesale purchase of electricity and ancillary services in the Philippines.

Its board is composed of representatives from the DOE, the National Power Corp., the National Transmission Corp. and the Power Sector Assets and Liabilities Management Corp. (PSALM) and independent players and stakeholders, including the Philippine Independent Power Producers Association (PIPPA), Philippine Electric Plant Owners Association (PEPOA), Philippine Ecozones Association (PHILEA), Institute of Electrical Engineers of the Philippines (IIEE) and two member electric cooperatives.