DOE eyes causer pay mechanism to protect consumers

By Alena Mae S. Flores – April 4, 2024, 8:20 pm
from manilastandard.net

The Department of Energy (DOE) plans to implement a causer pays mechanism (CPM) or cost sharing between generators and consumers to ensure consumer protection and accountability of market participants in ensuring grid reliability.

The DOE issued a draft circular, subject to public consultations, providing for policies for the effective utilization of ancillary services (AS) in the grid through the CPM.

“It is policy aiming to have a sharing of cost of reserve between generators and consumers, considering that reliability is affected by changes in supply and demand. Further to this, the policy is also designed to imposed appropriate AS cost to generators who cause the dispatch of contingency and dispatchable reserves,” DOE Electric Power Industry Management Bureau assistant director Luningning Baltazar said.

Baltazar said generators that are frequently on outage would have a higher share of AS cost as determined based on the formula for reserve and responsibility sharing.

The circular defines CPM as a principle where the cost of AS utilized should be recovered equitably from the Wholesale Electricity Spot Market member that requires or caused the use of such AS.

It said the CPM should apply to all WESM members requiring or causing the use of AS, which include the generation companies, the transmission network service provider and WESM customers.

The agency said the CPM should apply the Reserve Responsibility Share (RRS) formula to determine the share or contribution factor of each WESM member to the costs of each type of AS.

The circular was issued following the DOE’s declaration of the commercial operation of the Reserve Market (RM).