By Lenie Lectura - February
7, 2018
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.
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