The ERC is currently asking concerned parties to comment on the price cap.
According to the ERC, industry’s comments on the initial bid cap should be submitted on or before June 19 this year.
The ERC said that cap was proposed by a committee which was created for the study and adoption of certain market mitigating measures to be implemented in the WESM.
All interested parties are invited to submit their comments to the initial bid cap on or before June 19, 2006.
Aside from setting the ceiling, one of the committee’s goals is the adoption of initial bid caps or a ceiling for price offers at the WESM in order to limit or reduce possible instances of excessive increases in market prices.
This is an additional mitigating measure and will be put in place before WESM commences its Luzon commercial operations in end June 2006.
"This tripartite committee will address market price contingencies that may arise during the initial operations of the WESM when institutional mechanisms to address these contingencies are still untested.These contingencies, though remote, may include excessive increases in market prices. The committee is therefore expected to apply pre-emptive measures as needed during the early stages of WESM," Energy Secretary Raphael P.M. Lotilla said.
Lotilla also stressed that the formation of the tripartite committee was initiated to safeguard consumers against any extreme price volatility which could occur during the first few months of WESM operations.
"While we do not expect extreme pricing volatility in the first year of market operations, it is prudent to be cautious," said PEMC president Lasse Aznar Holopainen. "These additional measures are intended to address the eventuality of fuel price spikes on system problems that may occur. These are really an added safety feature over and above those already built into the system and the WESM rules, which govern the day to day trading behavior of the participants and prevent collusion, withholding of energy and other forms of anti-competitive behavior."
Under the resolution which created the committee, the DOE, ERC and PEMC will jointly monitor price volatilities, identify price-related contingencies and recommend measures to mitigate extreme price conditions if these do occur during WESM’s first year of operations.
"The electric power industry stakeholders can rest assure that the ERC will always do its best to support healthy competition in the spot market in order to promote customer choice of their electricity provider and to encourage active participation by local and foreign investors," according to ERC Chairman Rodolfo B. Albano Jr.
The committee, composed of the DOE secretary, ERC chairman and the PEMC president, is also tasked to implement regular and efficient information sharing system as well as a direct feedback mechanism to effectively address contingencies if they arise.
The tripartite committee is separate from the WESM Market Surveillance Committee (MSC), which also monitors the market for any unfair competition.