Mindanao electric cooperatives say their views on WESM disregarded

Posted on March 27, 2017
http://www.bworldonline.com/content.php?section=Economy&title=mindanao-electric-cooperatives-say-their-views-on-wesm-disregarded&id=142794

DAVAO CITY -- Electric cooperatives in Mindanao are opposing the terms under the planned wholesale electricity spot market (WESM), claiming that their recommendations during the Department of Energy’s (DoE) consultations were not considered.

In a news conference here Friday, the Association of Mindanao Rural Electric Cooperatives, Inc. (AMRECO) said one of their main proposals is establishing an “independent” market that will be managed by local industry stakeholders and not the Philippine Electricity Market Corp. (PEMC).

The 33-member AMRECO, which accounts for a majority of the electricity distributors in Mindanao, is also pushing for a lower price cap than the proposed P32 per kilowatt hour.

Following the posting and call for comments on the draft guidelines for the Mindanao WESM on its Web site in January, the DoE held consultations in five major cities in February and early March. The power supply market is scheduled for launch on June 26.

AMRECO President Sergio C. Dagooc said PEMC officials do not understand and are not “considerate” of the problems in the energy sector of Mindanao.

“We have experienced that in the Interim Mindanao Electricity Market or IMEM,” Mr. Dagooc said.

He added that the system operator of the Mindanao WESM should have board members who come from the southern islands’ consumer and religious groups, among others.

AMRECO established the Amreco Power Supply Aggregation Group Corp. in 2014 to consolidate the needed capacity of its members and be able to buy a bigger volume from the short-lived IMEM that was set up in late 2013.

However, the Energy Regulatory Commission (ERC) ruled that the aggregator company cannot sign supply contracts as it does not have the legal standing to cover the financial obligations of cooperatives that fail to pay the power suppliers.

In late February, PEMC President Melinda L. Ocampo said in a news conference here that the financial capacity of electric cooperatives remains the biggest concern in the planned opening of the WESM.

On the price cap, which is the same as the one set under the IMEM, Mr. Dagooc said the ERC should set a rate per power plant based on the energy source and allow demand and supply to determine prices.

“Example: this plant has a price depending on technology used, diesel, hydro... The principle of supply and demand will fix the price,” he said.

AMRECO held a workshop here last Friday for industry players, following a similar activity in Cagayan de Oro City a couple of weeks ago, with the aim of formulating alternative WESM guidelines that will be submitted to the DoE.

Mr. Dagooc said they want a “responsive mechanism” that will address the particular circumstances in Mindanao’s power sector.

“Hopefully, the DoE will remove the rules that are not applicable to us and hopefully insert our rules that will come up during the workshop,” Mr. Dagooc said.

The WESM, which is being implemented in Luzon and the Visayas, is planned for launching in Mindanao given the expected supply surplus of at least 1,000 megawatts by the end of the year as new power plants come online. -- Maya M. Padillo