Compliance committee formed to keep tighter watch on WESM

By Myrna M. Velasco – February 2, 2021, 6:00 AM
from Manila Bulletin

As summer months approach, the governing body of the Wholesale Electricity Spot Market (WESM) has formed a Compliance Committee to keep a tighter watch on strict compliance of trading participants in the country’s electricity spot market.

According to WESM governing body Philippine Electricity Market Corporation (PEMC), the newly constituted CC will replace the Market Surveillance Committee (MSC) which traditionally had been the entity policing market transactions, primarily those that are deemed anti-competitive market behavior of participants.

According to PEMC President Oscar Ala, the new compliance committee will form part of the evolution being enforced into the spot market despite the constraints posed by the pandemic. The creation of the CC has to be concretized via the WESM Governance Committee (WGC) that is also being re-constituted by PEMC.

To be designated as members of the WGC shall be individuals who are independent from power industry participants; and they must have skills and expertise appropriate for their assigned tasks. Their term will be for 3 years with a possibility of renewal for up to two (2) terms.

Market surveillance or ensuring strict compliance of traders in the WESM could keep the spot market away from suspicions of collusive acts; which in turn could result in price spikes in consumers’ billings – especially when supply is tight, which is an incident prevalent during summer months.

For many instances in the past, the WESM had been rapped as a venue for ‘market collusion’, but either investigation had not been fully carried out or market surveillance had been weak, so there’s no party or player pinned down yet for unwarranted acts in spot market trading.

As emphasized by PEM Board Chairman Noel Aboboto, “with the creation of the CC, a more rigorous compliance monitoring shall be enforced among all WESM players.”

He expounded that with the goal to ensure the efficient run of the spot market, “the PEM Board continuously studies the effectivity of the separation of the two governance and market operations functions and looking at ways to improve the administration of the WESM.”