DOE enforces last-minute changes in WESM-IMO board selection

Updated June 15, 2018, 11:17 PM By Myrna M. Velasco

https://business.mb.com.ph/2018/06/15/doe-enforces-last-minute-changes-in-wesm-imo-board-selection/

The Department of Energy (DOE) is seen abandoning earlier plans on the planned shift of the Wholesale Electricity Spot Market (WESM) to a truly independent market operator (IMO); as it has been enforcing last-minute changes and wanting to perpetrate a tight hold on the market with it having the sole power to appoint the IMO directors.

In a draft Circular that was presented to industry stakeholders on Monday (June 11), the agency proposed that “the IMO shall be constituted by the DOE, which Board Members shall be selected by the DOE with qualifications set forth under Section 6 of DOE Circular Number DC 2018-01-0002.”

In addition, it was noted that “the subsequent members of the IMO Board shall be selected and appointed, in accordance with the selection process to be submitted by PEMC (Philippine Electricity Market Corporation) and approved by the DOE.”

The energy department’s Circular came as a “shock” to the industry players, who are already prepped to the WESM operations’ transition to IMO by the end of this month.

In the earlier plan that was given go-signal by Energy Secretary Alfonso G. Cusi there shall be a “democratized selection” of the IMO Board members – and that election shall be held in the designation of the IMO President and the board of the PEM, being the WESM’s governing body.

That was until the disruption ignited by the DOE’s draft Circular, shattering into pieces all processes that had already been started in the market for its gallop into finally having an independent operator.

Industry players perceived that the reverse seems happening – that DOE will instead have even more solid grip on the market, by having just its preference and appointments comprising the IMO Board.

Further, the DOE mandates that “within one year from the incorporation of the IMO all the assets and liabilities of the PEMC as AGMO (autonomous group market operator), shall be transferred to the IMO, subject to the most appropriate and legally accepted manner.”

Energy Undersecretary Felix William B. Fuentebella defended that since the Energy Secretary “will no longer sit as chair of the PEM Board, the DOE must ensure that the current policies are in place.”

He added “the draft Circular also seeks to prevent any conflict of interest in the functions of the market operator.”

Fuentebella further qualified that “the WESM, taken as a whole, is created for the benefit of the consumers; hence, the DOE should ensure that the WESM will be governed and operated by a highly credible and independent entity.”