DoE seeking comment on penalties for WESM violations
By Victor V. Saulon – August 26, 2019 | 10:20 pm
from Business World
THE power industry has until Sept. 6 to comment on a draft circular from the Department of Energy (DoE) providing a “penalty manual” for participants in the wholesale electricity spot market (WESM).
Among others, the proposed manual aims to enhance the “process in determining applicable penalties by specifying the categories or types of breaches [of the WESM rules] and other relevant rules and the corresponding applicable penalty levels.”
It also seeks to establish penalty levels that take into consideration the nature of the breach and that are commensurate to the probable impact of the breach on the operations of the market.
The manual consolidates in a single document and harmonizes all applicable guidelines for determining penalties to avoid confusion while setting the procedures and respective obligations of responsible persons or entities with regard to the issuance of notice of penalty, remedies available to the WESM members in case there is a finding of breach.
The penalty manual also sets down the use of the collected penalties.
The WESM penalty system consists of three penalty levels. The penalty level to be imposed will depend on the nature of the breach and the circumstances surrounding the breach. The specific penalty levels to be imposed for each type of breach are provided for in a schedule of breach and penalties.
In the first level, a reprimand or a notice is sent to the WESM member that a breach has been committed, and enjoins the member from doing the same or similar act or omission that constituted the breach.
In the second level, financial penalties are imposed based on pre-set amounts according to each type of breach, and are as stated in the schedule of breach and penalties. The financial penalty may be a fixed amount or formula-based.
The third level covers escalated financial penalties in which under certain breaches, a higher financial penalty is imposed. The higher financial penalty amounts and the conditions under which they may be imposed are as stated in the schedule of breach and penalties.
Suspension and de-registration may also be imposed as a penalty for breaches explicitly specified under the market rules.
Based on the schedule of penalties, among the breaches that carry heavy penalties is failure to comply with forecast accuracy standards in respect to projected output submitted for a “must dispatch” power generating unit.
For instance, failure to comply with the prescribed mean absolute percentage error (MAPE) carries a penalty of P500,000 and P1 million under third level escalated penalties.
