DOE readies IMO transition team for WESM

By Myrna M. Velasco – March 23, 2017, 10:01 PM

from Manila Bulletin

A transition team is being formed by the Department of Energy (DOE) to finally set to fruition the installation of a private Independent Market Operator (IMO) for the country’s Wholesale Electricity Spot Market (WESM).

This will also be in tandem with the plan of the department to tap the United States Agency for International Development (USAID) to study and determine the appropriate structure of the IMO that shall man the spot market at its continued existence in the deregulated power industry.

It was gathered that for the meantime, Philippine Electricity Market Corporation (PEMC) Melinda L. Ocampo will stay on as president, but only during the transition phase.

It is not specified yet how long that will take, although Energy Secretary Alfonso G. Cusi has been indicating that he wants the IMO shift accomplished as soon as possible – and that timeline was originally targeted first half of this year.

He just hinted to media last week that he already “reached the point” in which the department needed to decide for the long-term fate of the WESM under an independent operating entity.

The DOE had earlier undertaken an audit on WESM’s operations and that has been its take-off point in recommending the transposition to IMO phase.

While traversing that transition, PEMC is also preoccupied with several enhancements of the spot market – including the proposed establishment of WESM in Mindanao.

That is still fraught with several concerns, but the tricky ones would be matters that will be up for decision of the energy department.

So far, for Luzon and Visayas grids, cost efficiencies are now being reaped based on the pricing trends manifesting at the spot market.

According to the WESM operator, settlement prices reached basement level of R1.90 per kilowatt-hour (kWh) in this year’s January supply month; and also relatively low in February even with supply tightening events triggered by the shutdown of the Malampaya gas production facility.

Within the period, it was noted that spot supply procurement had also gone up to a record 23 percent level, which was logged to have been the highest since December, 2006.

WESM is further treading into having its information technology (IT) platform enhanced with the anticipated commercial commissioning of its new market management system (NMMS) by June this year.

Meanwhile, the proposed establishment of Wholesale Electricity Spot Market (WESM) in Mindanao is still tangled with somewhat “difficult to understand and resolve” concerns, according to the Philippine Electricity Market Corporation.

But at the end of the day, according to PEMC President Melinda L. Ocampo, “it will be up to the DOE (Department of Energy) to decide” as to the fate of the planned integration of Mindanao spot market to the existing ones in Luzon and Visayas grids.

She noted that they will submit corresponding report to the department as to the outcome of stakeholder consultations on the propounded WESM in the southernmost power grid.

Ocampo said “PEMC has been fully supportive of the government’s plan to launch WESM in Mindanao that will address the supply concern and clamor from the generation sector in setting up a mechanism that will foster transparency and rationale pricing of electricity in the region.”

Among the contentious concerns, it was noted, had been the proposal of the Association of Mindanao Rural Electric Cooperatives, Inc. (AMRECO) for it to be Mindanao-WESM’s operator; and the claims that it would be illegal yet to have a spot market in the grid pending its transmission interconnection to Luzon and Visayas electricity systems.