DOE tells PEMC, Iemop to submit report on electricity spot market

By Lenie Lectura – February 3, 2020
from Business Mirror

THE Philippine Electricity Market Corp. (PEMC) and the Independent Electricity Market Operator of the Philippines (Iemop) were directed by the Department of Energy (DOE) to submit this week a performance report on the current electricity spot market structure.

“For the purpose of transparency and good governance, and pursuant to the mandate of the DOE to supervise the restructuring of the electricity industry, please submit within five working days from receipt hereof, your respective memoranda on the current PEMC-Iemop structure vis-à-vis the Epira provision on the establishment of an Independent Market Operator [IMO],” said Energy Secretary Alfonso Cusi in a letter to PEMC President Oscar Ala and Iemop President Richard Nethercott.

The letter was dated January 31.

PEMC used to be the operator of the Wholesale Electricity Spot Market before Iemop took over. PEMC remains the governing arm of WESM.

Cusi said the submission of the memoranda is part of an ongoing review and assessment of the market structure to ensure transparency, integrity of the WESM, as well as the protection of the consumers.

A task force was created in March 2019 to oversee the assessment of the WESM performance under the governance of PEMC and operations of the IMO.

“The assessment of the special task force covers the following: assessment of PEMC as the governance arm of the WESM, assessment of the performance of Iemop as the IMO and the overall performance of the WESM,” the DOE said.

Cusi’s letter comes after a lawmaker aired the allegation that Iemop’s creation was a result of a “sweetheart” deal.

Puwersa ng Bayaning Atleta Party-list Rep. Jericho Nograles said the selection for an IMO to manage the WESM was conducted “without any competitive selection process (CSP).”

It also alleged that Iemop grew “from a P7,000 capitalization to become a multimillion outfit with a total declared income of more than P100 million for the end of 2018.”

Moreover, the lawmaker said Iemop “automatically collects” 50 centavos for every kilowatt-hour from the consumers monthly electric bill.

The DOE, PEMC and Iemop disputed these.

The DOE said a competitive bidding was required only for foreign participants as an option under the Electric Power Industry Reform Act if the IMO was created in 2007.

“The DOE opted to create a separate entity composed of Filipinos who have acquired the necessary expertise to operate the WESM and ensure that the market will be managed by Filipinos,” the agency said.

While Iemop collects from consumers, the DOE said the amount is only “less than 1 centavo” and not 50 centavos.

The DOE also stressed that Iemop was created by virtue of DOE’s enactment of Department Circular 2018-01-0002 dated January 17, 2020, and consequently the IMO  Transition Plan, which are based on Section 30 of the Epira, which were jointly approved by the DOE and the Electric Power Participants.