‘Mindanao spot market to start in 2021’
By Lenie Lectura – November 25, 2020
from Business Mirror
THE Independent Electricity Market Operator of the Philippines (IEMOP) said Wednesday that there will be a delay in the start of operations of the Mindanao spot market.
The WESM in the Mindanao Grid was launched in June 2017. IEMOP, operator of Wholesale Electricity Spot Market (WESM), was expecting the commercial operation to commence on December 26 this year.
The WESM is the country’s trading floor of electricity. It is a centralized venue for buyers and sellers to trade electricity as a commodity, where prices are based on actual use (demand) and availability (supply). WESM started commercial operations in the Luzon grid in June 2006 and in December of 2010 in the Visayas grid.
IEMOP officials said the software system must be improved before the WESM in Mindanao and the launch of the upgraded WESM design takes place.
“There are enhancements which ERC (Energy Regulatory Commission) wants us to implement in the NMMS (New Market Management System) price determination methodology, particularly in the administered price conditions, price substitution mechanism pricing, secondary price cap and automatic pricing re-runs. These changes require additional development which could happen soon,” said Isidro Cacho Jr., IEMOP Chief Corporate Strategy and Communications Officer during a virtual press briefing.
These enhancements need to be certified by an independent auditor, added IEMOP’s Chief Operating Officer and Acting Trading Head Robinson Descanzo.
“All improvements must be reflected in the software before the commercial launch. But before this can happen, the software must be certified by an independent auditor who will declare that the system is compliant and ready to be used commercially,” Descanzo said.
Both said that the target for launch of the upgraded WESM design and the new spot trading floor in Mindanao would be moved sometime mid-2021.
“We have extended further the target launch to next year. We will launch both at the same time next year, probably middle of next year,” they said.
IEMOP is also conducting studies to develop detailed proposals for lower threshold implementation of the Retail Competition and Open Access (RCOA).
For the 4th quarter of 2020, IEMOP said it targets to complete studies on the overall Central Registration Body (CRB) implementation framework, profiling of non-interval meters, and retail aggregation.
The study comes after the ERC released a draft resolution prescribing the timeline for the implementation of retail competition and open access. Under the draft resolution, the contestability threshold will be reduced to 500 kilowatt (kW) on February 26, 2021. This will be followed by a reduction to 100 kW on January 26, 2022, which will also mark the start of retail aggregation.
Finally, the draft ERC resolution provides for the implementation of RCOA at the household level on January 26, 2023. A 10 kW threshold, however, is provided in the draft ERC resolution for household-level implementation.
In anticipation of the lowering of contestability threshold, IEMOP has submitted a proposal in 2018 which introduces changes to retail market processes that would enable the CRB to better handle the significant volume of retail transactions.
Under IEMOP’s 2018 proposal, WESM registration of contestable customers will be optional for those that would opt to purchase part of their requirements directly from the spot market as Direct WESM Members. This set-up is also proposed in cases when the contestability threshold is reduced further given the significant volume of retail transaction. Currently, all contestable customers are required to register in the WESM, most of which are Indirect WESM Members.
Meanwhile, IEMOP reported that the effective settlement spot price (ESSP) for October stood at P2,066.74 per MWh, with 12 percent of the total energy traded sourced from the market.
