Visayas WESM to finally open later this month

Business World Online

Posted on 10:44 PM, December 07, 2010

THE VISAYAS will finally have its own spot market for electricity this month despite concerns power prices could spike like in Luzon early this year.

Energy Secretary Jose Rene D. Almendras told reporters the Wholesale Electricity Spot Market (WESM) for the Visayas would be launched next week and start commercial operations on Dec. 26. Prices will surely spike but should stabilize next year, he added.

"We’re actually launching the WESM in the Visayas on the 14^th [and commercial operations] will be on the 26^th. Those who have opposed it finally understood why we need to do it," Mr. Almendras said.

"I told them, if you allow WESM to operate today, your brownouts will end today because there is a generation capacity of almost 200 megawatts (MW) that is not being brought to the market because there is no pricing mechanism for intermittent supply."

Electric cooperatives in the Visayas are against the implementation of WESM for fear of price increases brought about by tight supply. WESM-Visayas was supposed to have been operational last September but electric cooperatives sought a fresh delay.

Representatives of the Association of Visayas Electric Cooperatives were not immediately available for comment.

Energy Regulatory Commission (ERC) Executive Director Francis Saturnino C. Juan told BusinessWorld that market operator Philippine Electricity Market Corp. (PEMC) had already provided "refinements" to previously approved pricing mechanisms.

"We are still looking at these refinements but the commission should be finished before the planned implementation date," he said.

Mr. Almendras said there would be an initial period of increased prices due to high demand for power. "There might be spikes but once additional generating capacity comes in by next year prices will be more acceptable and stable," he said.

Under the Electric Power Industry Reform Act (EPIRA) of 2001, power distributors must get 10% of their supply from the WESM.

The Energy department is also "looking at possible mechanisms and structures that will be proposed next year to identify price spikes as soon as possible for both markets," Mr. Almendras said.

The WESM allows power producers and buyers of electricity like distribution utilities to trade electricity as a commodity. WESM commercial operations in Luzon involve 27 trading teams, 14 registered customers and six electric cooperatives, the Energy department has said.

Under Section 30 of the EPIRA, WESM operations in Visayas should have started about two years from the start of commercial operations in Luzon. The WESM began operations in 2006.

Trial operations for WESM-Visayas started in July with 11 power-generating firms, two distribution utilities, 15 electric cooperatives and two large consumers. --Emilia Narni J. David