Privatization of WESM set before open access

Manila Times.net
The Department of Energy (DOE) said the operations of the Philippines’ first electricity spot market will be privatized before open access begins in the power sector. DOE Secretary Jose Rene Almendras said transforming the state-administered operator of the Wholesale Electricity Spot Market (WESM) into an independent market operator (IMO) would ensure transparency once retail competition starts.

“It’s not that I won’t push through. No, we will do open access. But we want to do it with the right things already,” he said.

Created under the Electric Power Industry Reform Act of 2001 (EPIRA), the WESM is an alternative market where power suppliers and distribution utilities may trade their electricity requirements. The EPIRA likewise mandated open access, wherein power generators may directly market their output to consumers, after government privatizes at least 70 percent of both its power plants and its contracted output with independent power producers.

Once open access commences, qualified consumers and utilities that fail to secure supply contracts with power generators would have to source their requirements from the WESM. Industry players are banking on open access to help bring down the cost of electricity, which is the second most expensive in Asia after Japan.

Government-supervised Philippine Electricity Market Corp. (PEMC), whose board of directors is composed of representatives from the power industry, runs the WESM, which started commercial operations in Luzon in 2006.

The EPIRA, however, mandates the appointment of an IMO a year after the spot market’s implementation.

Officials from both the DOE and PEMC from the previous administration earlier said that the delay in the formation of an IMO was brought about by the need to conduct an audit to determine the appropriate scheme and design for the eventual privatization of the spot market.

The DOE chief earlier aimed for establishing the IMO this year but a study conducted by the Asian Development Bank (ADB) on how to go about this has yet to be completed.

“ADB hired consultants to help us so I am waiting for them to get back at us. The first set of outputs they showed us was how to form the committee, some minor problems we needed then to change it,” Almendras said.

He said the IMO would likely be set in place in the first quarter of 2011 in time for open access next year.

“First of all it’s the [Energy Regulatory Commission] who has to declare open access so I am hoping by the middle of next year, we will start making recommendations to that effect. As to actually when, I am assuming that by the middle of next year we will have already put in place all the other infrastructure that is needed,” the DOE chief said.
EUAN PAULO C. AÑONUEVO