WESM operator: We’re the only experts in the field

By: Ronnel W. Domingo - 05:08 AM January 31, 2020

https://business.inquirer.net/289375/wesm-operator-were-the-only-experts-in-the-field

The Independent Electricity Market Operator of the Philippines Inc. (IEMOP) is the only organization in the country with the qualifications to run the wholesale electricity spot market (WESM), according to the private firm’s chief operating officer.

IEMOP COO Robinson Descanzo said this in an interview, reacting to statements made by Pwersa ng Bayaning Atleta party list Rep. Jericho Nograles, who questioned the company’s financial fitness to run the WESM.

Last week, Nograles alleged IEMOP got the contract to run the WESM without going through competitive bidding. He claimed the firm’s capitalization was only P7,000 even as it earned hundreds of millions as WESM operator.

Descanzo deferred comments on Nograles’ allegations, but said that most IEMOP employees were formerly employed with the Philippine Electricity Market Corp. (PEMC), the firm’s state-run predecessor.

IEMOP took over the management of the WESM from PEMC in September 2018, following the Electric Power Industry Reform Act’s (Epira) provision that the market should be run independently.

“Almost 70 percent of our people have been here (power generation market) since Day 1, some of them even before the WESM was established,” Descanzo said.

“There is no other entity that has the capacity to do what we do,” he added.

Last week, the Department of Energy (DOE) said there was a “sweetheart deal” as the the engagement of IEMOP was done through a transition plan that was followed in accordance with the Epira.

In a statement, the DOE said the IEMOP did not have to go through the competitive selection process, since the law only required such if involving foreign participants and had the independent market operator been created in 2007.The entry of IEMOP happened 17 years after the enactment of the law and 12 years after the WESM started commercial operations.

“The DOE opted to create a separate entity composed of Filipinos who have acquired the necessary expertise to operate the WESM and ensure that the market will be managed by Filipinos,” the agency said.

IEMOP: Power spot market prices likely to increase amid tight supply

Danessa Rivera (The Philippine Star) - January 31, 2020 - 12:00am

https://www.philstar.com/business/2020/01/31/1989090/iemop-power-spot-market-prices-likely-increase-amid-tight-supply

MANILA, Philippines — The country’s electricity spot market operator sees a repeat of elevated spot market prices this year due to anticipated tightness of supply amid an expected increase in demand as well as slow development of new power plants.

In a briefing yesterday, Independent Electricity Market Operator of the Philippines Inc. (IEMOP) said effective settlement spot prices (ESSPs) averaged P5.43 per kilowatt-hour (kwh) last year, higher than the P3.69 per kwh in 2018, P3.37 per kwh, in 2017, and P3.33 per kwh in 2016.

In the past year, the highest ESSP was recorded in June at P8.38 per kwh while the lowest was registered at P2.18 per kwh in September.

IEMOP said last year’s average price was 57 percent higher than the average prices of the previous three years.

It attributed the increase to “thinning supply margins as available generation capacities are now unable to adequately support the increasing demand given the heightened occurrence of forced and maintenance outages and insufficient development of new generation capacities.”

IEMOP chief operating officer Robinson Descanzo said the series of unplanned plant outages should be a signal to check the operating efficiency of power plants.

Meanwhile, natural calamities and delayed entry of additional capacity into the grid also played a major role in the rise in spot market prices, he said.

Several power plants and transmission lines were affected by the 6.5-magnitude earthquake in Zambales in April, and by typhoons Tisoy and Ursula in December.

On the other hand, the commercial operations of  the 355-megawatt (MW) Unit 3 of the Masinloc power plant and the 455-MW San Buenaventura power plant, which were expected to come in during the hot months, only started operations in the second half.

For this year, IEMOP expects peak demand to grow by 5.6 percent to 14,191 MW. This means an additional of 700 MW capacity is needed to be injected into the grid—around 500 MW in Luzon and nearly 200 MW in Visayas, Descanzo said.

“But we don’t have additional power plants coming in before summer. They  will come in only after summer,” Descanzo said.

He was referring to the entry of the GN Power Dinginin coal power plant with 668 MW, which is expected to be online in June.

“With the expected increase in demand, tight supply conditions and price spikes are likely to happen particularly during the summer period. This underscores the need for new generation capacities to meet increasing demand and to help prevent recurrence of high market clearing prices,” Descanzo said.

IEMOP’s findings will be reported to the Department of Energy (DOE) in preparation for the summer period.

‘We’ll just highlight the impact of tight supply, so maybe they can accelerate the plants that are commissioning,” Descanzo said.

TransCo denies influencing takeover of electricity spot market

Danessa Rivera (The Philippine Star) - January 31, 2020 - 12:00am

https://www.philstar.com/headlines/2020/01/31/1989222/transco-denies-influencing-takeover-electricity-spot-market

MANILA, Philippines — State-run National Transmission Corp. (TransCo) said it will exhaust legal actions amid allegations that it had influence in Independent Electricity Market Operator of the Philippines Inc. (IEMOP)’s takeover of the wholesale electricity spot market (WESM).

In a statement, TransCo defended the formation of IEMOP and its takeover of WESM, noting it is legal and mandated under the Electric Power Industry Reform Act (EPIRA) of 2001.

The statement was issued amid news reports implicating TransCo president and CEO Melvin Matibag and Secretary Alfonso Cusi of the Department of Energy (DOE).

“First, except for its transitory role as initial market operator, TransCo has no relevance to the issue on the nature, composition and operations of IEMOP, the creation of which was upon the directive of the DOE, not TransCo,” spokesman Andre de Jesus said in a statement.

De Jesus said the DOE’s participation in the formation of IEMOP is not only legal but also mandated by law.

“The mere insinuation that TransCo – or attorney Matibag himself – can influence the DOE is not just libelous; it is, in itself, completely preposterous. Second, as regards references to Sec. Cusi, his years of dedicated – and untarnished – public service speak for themselves,” he said.

“In the meantime, we are exploring all legal remedies to vindicate the rights of the persons wrongfully implicated in these articles and, more important, to restore the public’s faith in TransCo’s service to the Filipino People,” De Jesus said.

TransCo also reiterated the DOE’s statement on the legality of the IEMOP.

The state-run firm said the IEMOP as independent market operator (IMO) was formed by the DOE and the Philippine Electricity Market Corp. (PEMC) – the former WESM operator – pursuant to Section 30 of EPIRA.

The DOE issued a circular in January 2018 for the IMO Transition Plan, enacted precisely in compliance with this directive.

“The creation of IEMOP, therefore, was not only legal – it was, and more important, mandated by the law (EPIRA) itself,” De Jesus said.

On the issue of the alleged absence of competitive selection process (CSP) in the formation of IEMOP, TransCo said EPIRA does not have a provision requiring competitive bidding.

It also said individuals comprising IEMOP are from the power Industry, particularly from PEMC, “which had formerly managed registration of market participants; received generation offers; set market prices and dispatch schedules of generation plants; and handled billing, settlement, and collections, among other functions.”

“Simply put, IEMOP merely assumed the functions – indeed, continued the mandate – of the PEMC,” De Jesus said.

Lastly, TransCo said IEMOP does not collect P0.50 for every kilowatt-hour that every consumer pays in their monthly electric bill, and that it only collects less than one centavo for every kilowatt-hour used by electricity consumers.

“This amount, approved by no less than the regulator of the Power Industry – the Energy Regulatory Commission (ERC) itself – and exponentially less than what has been reported, is necessary to cover IEMOP’s own budgetary requirements. PEMC also receives a share of these market fees as the WESM’s governance arm,” De Jesus said.

Last week, Puwersa ng Bayaning Atleta party-list Rep. Jericho Nograles questioned how and why the IEMOP got the deal to manage the WESM without going through competitive selection process, calling it a “sweetheart deal.”

Nograles also said the new WESM operator, which only had a P7,000 capitalization, collects 50 centavos for every kilowatt-hour paid by consumers in their electricity bills.

The lawmaker called on the House of Representatives’ committee on energy to investigate the anomaly on the basis that IEMOP’s qualifications are highly questionable.