posted July 06, 2016 at
11:35 pm by Alena Mae S. Flores
The Energy Regulatory
Commission asked distribution utilities to assume any loss arising from the
trading of contracts at the Wholesale Electricity Spot Market.
ERC issued Resolution
No. 16 series of 2016 stating that it would adopt the 2008 policy in the
monthly computation of generation rates of distribution utilities.
ERC said the move aimed
to protect the interest of consumers from profiteering or advantages gained by
distribution companies at the WESM, the country’s trading floor of electricity.
The regulator said it
resolved to adopt the policy stated in the letter-reply to National Power Corp.
dated Oct. 20, 2008, in the monthly computation of generation rates.
ERC said the 2008 rules
stated that “where all the gains that the DUs obtain from selling to the WESM,
as well as the excess kWh sold back to the WESM, shall be reflected as
reduction from the WESM generation cost and kWh purchased.”
It said “the losses
incurred both in monetary and excess kWh sold back to the WESM due to the
trading of contracts [should] all be borne by the DUs as a result of the
participation in the electricity market trading.”
The formula for the
generation cost was determined by summing up the cost of power from all
suppliers, WESM purchases, DU-owned generation facility less the generation
revenue from time of use customers, cost of power distributed to customers
under a sale for resale agreement, if the customers being supplied are not
connected with the main distribution grid and the cost is different from those
of other regular customers.
Former National Power
Corp. president Cyril del Callar raised an issue in 2008 on the payments and
reimbursements made by the Philippine Electricity Market Corp., operator of the
WESM, to distribution utilities to nominate higher bilateral contract
quantities as compared to their actual consumptions.
Napocor was forced to
buy back such excess nominations of the distribution utilities that were WESM
direct members to serve their customers.
The state-owned power
firm claimed that the practice of excess nomination of BCQs by WESM direct
members would ultimately impact on the non-WESM direct member-customers of
Napocor by way of subsidization so they could resort in gaining in the market
for additional profit to the detriment of Napocor and customers.
ERC responded to
Napocor stating that “whatever gains the DUs obtain from selling to the WESM is
passed on to the end users through the automatic generation rate adjustment.”
“As a regulator, it is
the commission’s mission to protect and promote long-term consumer interests.
The commission will ensure that losses due to the trading of the contracts to
the WESM cannot be passed on to consumers,” ERC said in a letter to former
Napocor president Froilan Tampinco.
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