WESM operations eyed to be shifted to PSE again

By Myrna M. Velasco – August 7, 2019, 10:00 PM
from Manila Bulletin

With targets to remerge the governing entity and the operating unit of the Wholesale Electricity Spot Market (WESM), proposals are being resuscitated that the operations of the spot market be shifted to the Philippine Stock Exchange (PSE).

Energy Secretary Alfonso G. Cusi (Source: https://www.bloomberg.com)

Energy Secretary Alfonso G. Cusi noted that based on their ongoing review, it is being established that the legal standing of the Independent Electricity Market Operator of the Philippines, Inc. (IEMOP) is just a “contractor” of WESM governing body Philippine Electricity Market Corporation (PEMC).

And with that stature, he asserted that IEMOP’s contract to operate the electricity spot market could be terminated – and could still be given to other entity, like the PSE. “IEMOP has a one year contract, then we evaluate,” he said.

Cusi further noted “IEMOP is just a contractor, it is a contractor of PEMC, so if we establish that it fails on its performance, then we can give that function to others, we can give that to the PSE.”

It could be culled though that when the idea of entrusting the WESM’s operations to the PSE was first brought up, the operator of the country’s stock market had been questioned on its technical capacity to run a more technically complex spot trading activity like in the power sector.

As previously raised, trading in the WESM involves physical capacities of power plants that have their own technical configurations – and the PSE, it has been emphasized, may not have that level of expertise to handle such kind of commodity trading yet.

Cusi moved for the setting up then of IEMOP to serve as the independent operator of the spot market – separating it from PEMC – the latter’s function of which should just have been supposedly confined to market oversight as well as fortification and recommendation of rule changes.

PEMC and IEMOP went to the extent of signing an Operating Agreement (OA) when it comes to division of physical space in their offices; human resources and other facets of their operations.

However, the energy secretary is now sounding off “change of heart” from that direction for the country’s spot market.

He said there is a required two-year experience for an entity to be engaged as operator of the spot market, and IEMOP may not necessarily had that when it was tapped as the WESM operating entity.

“The surviving entity must be PEMC. We are examining how IEMOP had executed its assigned function. The problem is under the EPIRA (Electric Power Industry Reform Act), there is a need for two years experience,” he reiterated.