Energy department mulls transition board for WESM

Manila Times.net
Published : Thursday, January 05, 2012 00:00 Written by : Euan Paulo C. Añonuevo, Reporter


The Department of Energy (DOE) is pushing for the creation of a transition board that will pave the way for the Wholesale Electricity Spot Market’s (WESM) transfer to an independent operator.


In a presentation on the appointment of an independent market operator (IMO) for the WESM, the DOE outlined a plan to set up an interim board with a two-year term.


The proposed board will be tasked “to prepare and manage the transition” of the spot market from state-administered Philippine Electricity Spot Market Corp. (PEMC) to an IMO.


Under the Electric Power Industry Reform Act of 2001, an IMO with a proven track record of not less than two years as a leading market operator of a similar- or larger-sized electricity market should have been appointed one year after WESM’s implementation.


Based on the DOE’s recommendations, the transition board that will prepare the entry of the IMO will be composed of the Energy secretary, the PEMC president and three independent members appointed by the department.


Among the tasks outlined for the board is to assess restrictions on the IMO’s decision making-power in the spot market; to prepare the transfer of assets and liabilities from PEMC to the IMO; to review tax implications; and to update incorporation details and by-laws for PEMC to the IMO.


Energy Secretary Jose Rene Almendras earlier said that they plan to restructure PEMC into a non-profit institution instead of bidding out control of the spot market for electricity to the private sector to help keep prices at the WESM from increasing.


“Yung structure mo andun pero board mo independent na, hindi na government. May sweldo pero wala nang profit margin, at cost yun, operating cost [The structure is still there but the board will be independent and will no longer be government. Salaries would be paid but there will be no profit margin, and that is an operating cost],” he added.


The WESM, which started operations in Luzon in 2006, is a trading platform for electricity between power generators and large-scale customers such as distribution utilities and industries.


Electricity rates at the spot market are volatile, since WESM prices are dictated by market forces as well as weather and power facilities’ conditions. Power plant operators in the country had been clamoring for the turnover of PEMC’s operations to an IMO to promote transparency at the WESM.


To recall, a number of irregularities at the WESM were uncovered since its inception, such as power generators withholding capacities and trading teams manipulating prices, most of which were blamed on state agencies.