Majority of WESM members favor shift to IMO in vote

By Lenie Lectura - February 7, 2018

https://businessmirror.com.ph/majority-of-wesm-members-favor-shift-to-imo-in-vote/

Members of the Wholesale Electricity Spot Market (WESM) have voted in favor of a shift to an independent market operator (IMO).

During the first membership meeting held late Tuesday afternoon, 81.3 percent, or 1,493,652.5 of the total 1,837,440 votes, were in favor of an ndependent WESM operation.

Votes against stood at 4,029.5 votes, or 0.002 percent, abstention votes were at 475.2, or 0.0003 percent, while 339,284.30, or 18.5 percent, did not cast a vote.

The move toward the independent operations of the electricity market is overdue for more than a decade, with the Electric Power Industry Reform Act of 2001 (Epira) initially calling for the formation of an IMO one year after the WESM’s establishment.

The WESM is currently being operated by the Philippine Electricity Market Corp. (PEMC), a 15-man body led by the secretary of the Department of Energy (DOE) and composed of representatives from each sector of the electric-power industry, as well as independent members.

The PEMC was incorporated in 2003 and was constituted as the autonomous group market operator to oversee market governance and perform the functions of the market operator in the WESM.

Energy Secretary and PEMC Chairman Alfonso G. Cusi welcomed the results of the vote, saying that independent WESM operations exemplify the government’s commitment to continued industry reform, private-sector participation and inclusive progress.

“We will be fulfilling one of the most salient programs of the Electric Power Industry Reform Act, which empowers the country with more freedom of choice, as well as a free and competitive market,” Cusi said.

Upon the recommendation of the PEMC Transition Committee and the approval of the PEMC Board, the IMO should, among others, comply with the following requirements:

It should be an independent entity to be formed or selected, and not owned directly nor indirectly by distribution utilities, retail electricity suppliers and other industry players;

It should be jointly endorsed by the DOE and the electric-power industry participants through a majority vote of PEMC members; and

It must possess financial and technical capabilities and operate on a nonprofit basis.

The DOE would cease its involvement in the PEMC Board, but maintain its mandates of policy oversight, approval of the rules, manuals, as well as operational and performance standards, while the Energy Regulatory Commission (ERC) would maintain its role as the regulator. The transition plan retains PEMC as the governing body of the IMO, albeit existing as completely separate entities.

Cusi emphasized that despite the IMO’s independence, the DOE shall continue with its mandate to prescribe fair and relevant WESM rules.

Furthermore, the DOE and the ERC will maintain vigilance in their roles as the people’s guardian against breaches and anticompetitive behavior.

Under the Department Circular  DC2018-01-0002, otherwise known as Adopting Policies for the Effective and Efficient Transition to the IMO for the WESM, the DOE and the ERC will ensure fair competition and the promotion of public interest as envisioned in the Epira.

The policy on IMO outlines the mandates of the DOE and the ERC over the operator; its guiding principles; its composition, including the board of at least five members; its functions; and WESM’s new governing and governance structure and the conditions for transition.