PEMC allowed to collect P800 million from market players over 3 years

MANILA, Philippines — The Energy Regulatory Commission (ERC) has allowed the Philippine Electricity Market Corp. (PEMC) to collect over P800 million from its trading participants over a three-year period.

The amount will pay off the loan used to finance the Market Management System (MMS) for the wholesale electricity spot market (WESM).

In a decision, the ERC has approved PEMC’s application for additional market transaction fees (MTF) amounting to P816.86 million for the repayment of the loan used to set up the MMS in 2006.

PEMC will charge Luzon customers higher since the spot market was only implemented in the Visayas in December 2010. The spot market in Luzon started operating in June 2006.

For market participants in Luzon, the spot market operator will charge an additional P0.0043 per kilowatt-hour (kwh) in 2018, P0.0039 per kwh in 2019 and P0.0037 per kwh in 2020.

Meanwhile, those in the Visayas will see market fees go up by another P0.0024 per kwh in 2018, P0.0021 per kwh in 2019 and P0.002 per kwh in 2020.

The proceeds from the additional MTF will be used to pay off the refinancing of the loan used for the establishment of the MMS.

The power regulator allowed PEMC to enter into a facility agreement with a commercial bank to secure a reasonable interest rate.

“PEMC is hereby directed to exert its best efforts to negotiate for a reasonable interest rate with a commercial bank and execute therewith the necessary facility agreement to refinance the MMS loan,” the ERC decision said.

The MMS project is the infrastructure that supports the operations of WESM, including pricing and scheduling. The previous market operator was originally vested on the National Transmission Co. (TransCo) by the Department of Energy (DOE).

To implement the WESM, TransCo entered into loan agreements with the Asian Development Bank (ADB) and the Japan Bank for International Cooperation (JBIC) in 2003.

In March 2004, the state-run firm also executed contracts with ABB Inc. Network Management Unit for the turnkey implementation for WESM’s MMS; with Marketplace Co. Pty Limited for the project management consultant for WESM; and with PA Consulting Group Ltd. for the service agreement for independent auditor.

But in October of the same year, TransCo transferred its market operations functions to PEMC, which was designated as the project contract administrator for the MMS contracts.