IEMOP sets ‘red flag triggers’ on WESM trading breaches
By Myrna M. Velasco – June 28, 2021, 3:47 PM
from Manila Bulletin
The Independent Electricity Market Operator of the Philippines (IEMOP) is enforcing triggers to potential ‘red flags’ it has been tracking on the operation of the Wholesale Electricity Spot Market (WESM) – be that on unusual price spikes or in cases when capacity being traded would precipitate ‘yellow’ or ‘red alert’ conditions in the grid.
Isidro E. Cacho, chief corporate strategy and communications officer of IEMOP, has issued that clarification following a major faux pas of the company’s spokesperson who stated that the spot market operator is unaware of any basic coordination happening between IEMOP and the Market Surveillance Committee (MSC) – especially in cases of ‘extraordinary events’ in the spot market — like when prices caps are breached on a number of trading intervals.
Cacho explained that when the settlement price already surged to a level that is more than P10 per kilowatt hour (kWh) in a particular trading interval, “that’s already detected by the market’s system as a red flag, and that’s duly reported on real-time basis to the MSC,” or the independent surveillance body overseeing the WESM.
“There’s an interface of the WESM system with them (MSC), so they can see what’s happening in the market real-time. Aside from that, especially if there are already triggers for ‘red flags’ in WESM trading activities, we also have viber as well as email communications with the MSC on these red flags that we have been apprehending in the market,” Cacho stated.
The IEMOP executive further indicated “it’s not only the ‘pricing concerns’ that are being monitored for red flags, but we’re also looking closely at triggers (for market breaches) when the system operator declares yellow alert or red alert conditions in the grid.”
He stressed that “the enforcement of triggers for red flags in the market had been stepped up since the price spike incidents in 2013,” – when WESM settlement prices triggered more than P5.00 per kWh spikes in electricity rates due to the simultaneous shutdowns of power plants that had been aggravated by the maintenance shutdown of the Malampaya gas production facility at the time.
“So what’s sure is: we have real-time coordination with MSC when it comes to apprehending market breaches in the WESM. But very often, it’s the field investigation part that has some lags – because there’s a process that has to be observed like coordination with the Market Assessment Group then with the DOE (Department of Energy) and ERC (Energy Regulatory Commission), especially when there is a need to directly probe the technical causes of the plant outages. And our role on that is: we provide the information, but we’re no longer involved in the investigation process,”he expounded.
On Saturday (June 26), the IEMOP has finally implemented the new five-minute trading interval in the spot market, that’s a shift from the one-hour trading interval that prevailed for 15 years in WESM’s operations.
A key feature of the enhanced WESM design operations (EWDO) is the shortened dispatch interval; and there is also a “single pricing mechanism” being enforced – a modification from previously having ex-ante (based on forecast) and ex-post (actual trading outcome) pricing schemes.
On gate closure for both price and volume offers, that was also reduced from one hour to just 30 minutes; and IEMOP said that still sets latitude for trading participants to exercise flexibility in managing their risks in the market for unplanned events.
