WESM-Mindanao still tangled with ‘market operation’ concerns

By Myrna M. Velasco – April 4, 2017, 10:00 PM

from Manila Bulletin

The proposed establishment of Wholesale Electricity Spot Market (WESM) in Mindanao is still tangled with somewhat “difficult to understand and resolve” as well as wobbly “market operation” 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.

WESM-Mindanao is in the short-term “to-do list” of the energy department so the lingering capacity surplus in the grid could have alternative market channel.

Notably 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 now 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.

Nevertheless, the targeted timeline will still depend on how fast the DOE and the industry regulator would be acting on the required rule changes as well as the proposed modification on the price determination methodology underpinning the spot market’s new trading platform.

“Changes to the WESM design such as shortening of dispatch interval, economic scheduling of PMin (minimum stable loading) and adoption of ex-ante pricing only among others are already given green light by the DOE and are reflected in the configuration of the new market management system,” PEMC said.

It emphasized that “these enhancements aim to address market operational audit findings and introduce new features and functionalities such as simplified compliance reporting process and demand-side bidding.”