ERC orders refund from spot-market operator

Manila Times.net

THE Energy Regulatory Commission (ERC) has ordered the electricity spot market operator to refund consumers for the unused fund for its computer system upgrade project.

In an order, the ERC directed the state-administered Philippine Electricity Market Corp. (PEMC) to refund P268.2 million in market fees, inclusive of carrying charges, it collected from participants in the Wholesale Electricity Spot Market (WESM).

The said amount was accumulated by PEMC from the additional P0.0015 per kilowatt-hour earlier allowed by the regulator in the market fees charged against power generators starting 2009.

This rate was intended to fund PEMC’s proposed market management system (MMS) migration to be handled by ABB Inc. the provider of the latter’s original MMS.

The MMS is the computer system, consisting of both the hardware and software components, which facilitates the trading, dispatch and subsequent settlement of transactions in the WESM.

PEMC claimed that it needed to replace the present system since the MMS, which cost more than $8.0 million, has gone past its economic life and has started to be inefficient due to wear and tear.

However, the ERC found that the MMS migration project will no longer push through as PEMC and ABB failed to agree on vital contractual terms and issues.

While PEMC asked that the amount already collected for the project be used instead for a new MMS and that it be allowed to continue collecting the additional market fee, the ERC found no basis to allow this since the spot market operator has not filed any petition for such.

To determine the reasonableness and necessity of the proposed new MMS, which will again “cost hundreds of millions of pesos that will end up being recovered from the electricity end-users through their power bills,” the ERC also directed PEMC to submit documents and
comprehensive study on the project, as well as proof of the extent of obsolescence of the existing MMS.

“A project must be extremely necessary and its cost must be reasonable to merit the ERC’s approval since the same will impact on electricity rates,” Zenaida Cruz-Ducut, ERC chairperson, said.

Euan Paulo C. Añonuevo