WESM-Mindanao commercial operation to start next month
By Myrna M. Velasco – November 23, 2022, 3:08 PM
from Manila Bulletin
The Department of Energy (DOE) is finally eyeing to roll into commercial operation before the end of this year the long-delayed Wholesale Electricity Spot Market (WESM) in Mindanao to cater to energy capacities that will be traded by qualified participants in that grid.
A draft circular showed that DOE is inclined to declare December 26, 2022 as the commercial operation date (COD) of the spot market in Mindanao.
Alongside that plan, the energy department indicated that “the scheduling and dispatch of capacities in Mindanao shall be based on the schedules generated by the market operator in accordance with the WESM rules and the relevant market manuals.”
As emphasized, the operation of the WESM in the southernmost power grid will be carried out ahead of the targeted commercial operations of the Mindanao-Visayas Interconnection Project (MVIP), the last leg of transmission assets’ linkup that will concretize the country’s bid of having a single nationally-connected power grid.
The DOE stated, in particular, that based on discussion with stakeholders, “the WESM in Mindanao should be implemented ahead of the operations of the MVIP, since creating a new mechanism for settlement.”
In view of that, the DOE qualified that WESM-Mindanao’s operations will “require amendments to the price determination methodology (PDM), and enhancements to the current software which will entail additional cost and time.”
The PDM, in particular, will provide the specific details on how the dispatch schedules and locational marginal prices are calculated in the market dispatch optimization model (MDOM) – and such shall include price substitution methodology “in cases of extreme nodal price separation.”
Additionally, the PDM underpins the calculation of settlement amounts that will be net of the bilateral contracts being funneled through trading in the spot market.
As of mid-November this year, it was conveyed that at least 68 – out of the targeted 101 expected participants in Mindanao – have so far completed registration processes in the spot market.
Taking cue from that then, the DOE noted that “the remaining requirements of the unregistered participants will not necessarily impede registration and the commercial operations of the WESM in Mindanao.”
It was likewise stated in the DOE Circular that the prudential requirement (PR) for trading participants in WESM-Mindanao could be relaxed for at least three months.
“The Mindanao WESM trading participants shall be allowed to post the required PR within the three (3) month relaxation period…for each of the spot transactions during the period of relaxation of the posting of PR, the concerned Mindanao WESM trading participants shall ensure timely settlement of its monthly bills with the market operator,” the draft DOE Circular stated.
