Aboitiz pushes power spot market in Mindanao

By Danessa Rivera (The Philippine Star) | Updated July 14, 2016 - 12:00am

http://www.philstar.com/business/2016/07/14/1602508/aboitiz-pushes-power-spot-market-mindanao

MANILA, Philippines – A power spot market should be established in Mindanao to facilitate the entry of new power plants and prevent supply problems in the future, a power industry official said.

A Wholesale Electricity Spot Market (WESM) in Mindanao would be a necessary requirement once power plants being built start operating in the next few years, Aboitiz Power Corp. CEO Erramon Aboitiz said in an interview after the BusinessWorld Economic Forum Tuesday.

“With all the power plants that are coming in, the baseload coal-fired power plants, they need a WESM to be dispatched economically. Now, the dispatch is based on whatever your contracts are to customer requirements, not on economic dispatch. I think that really has to change,” he said.

Initially, an Interim Mindanao Electricity Market (IMEM) was set up as a trading floor for electricity in in the region, similar to WESM in Luzon and Visayas. It was launched on Sept. 26, 2013 and started full commercial operations on Nov. 26, 2013, with the Philippine Electricity Market Corp. (PEMC) as operator.

However, IMEM was suspended February 2014 following a grid-wide power interruption in Mindanao, preventing power companies with excess generating capacity to offer their output to distribution utilities (DUs).

Apart from instances of power interruptions during its operations, PEMC also faced the difficulty of getting payments from DUs for the capacity bought in IMEM.

PEMC president Melinda Ocampo said they have already requested the Department of Energy (DOE) to settle everything before it proceeds in establishing the WESM in Mindanao.

“Together with the DOE, there will be again a reconciliation (of settlements) with the customers for the IMEM,” she said, noting DUs have unpaid obligations with AboitizPower and the Alcantara Group.

However, unsettled payments should not be a reason not to implement WESM in Mindanao, Aboitiz said.

“The debt is one thing but I don’t think that should stop WESM from being implemented,” he said. “I’m not saying forget the debt, what I’m saying is let not that be a hindrance. We’re willing to work with government to spread that over a period of time and let’s not let something as important as WESM in Mindanao be stopped because of that.”