‘No irregularities in Iemop choice as electric spot market operator’

By Lenie Lectura - January 22, 2020

https://business.mb.com.ph/2020/01/21/petroenergy-earmarks-%E2%82%B1370-million-more-for-re/

No irregularities. The Department of Energy (DOE) has insisted that the Independent Electricity Market Operator of the Philippines (Iemop) Inc. bagged the deal to manage and operate the electricity spot market fair and square.

The agency, in a briefer issued Monday night, denied that the creation of Iemop was a result of a “sweetheart” deal.

Instead, the DOE said Iemop was created by virtue of the enactment DOE Department Circular 2018-01-0002 dated January 17, 2018, and consequently the IMO (Independent Market Operator) Transition Plan, which are based on Section 30 of the Epira (Electric Power Industry Reform Act), which were jointly approved by the DOE and the Electric Power Participants.

“No.  It is not,” the DOE said, responding to allegations in some quarters that it was a sweetheart deal.  “A Transition Plan was followed which was in accordance with law,” it added.

The other day, Puwersa ng Bayaning Atleta Party-list Rep. Jericho Nograles said the selection of an IMO to manage the Wholesale Electricity Spot Market (WESM) was conducted “without any competitive selection process [CSP].”

It also alleged that Iemop grew “from a P7,000 capitalization to become a multimillion outfit with a total declared income of more than P100 million for the end of 2018.”

Moreover, the lawmaker said Iemop “automatically collects” 50 centavos for every kilowatt-hour (kWh) from consumers’ monthly electric bill.

The DOE said a competitive bidding was required only for foreign participants as an option under the Epira if the IMO was created in 2007.

“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.

While Iemop collects from consumers, the DOE said the amount is only “less than 1 centavo” and not 50 centavos.

The agency went on to clarify that Iemop’s incorporation was approved by the Transition Team based on the plan outlined in the DOE’s department circular.

“The system was transferred to Iemop based on the Operating Agreement between PEMC [Philippine Electricity Market Corp.] and Iemop dated September 18, 2018, and people running the system were disengaged from PEMC and hired by Iemop,” said the DOE.

Hence, it added, “Iemop was a ‘spin off’ of PEMC towards independence in market operations,” said the DOE.

PEMC used to perform the market operations, with the DOE secretary as chairman and most of the board members coming from the power industry.

Energy Secretary Alfonso Cusi gave up the chairmanship on condition that the market operations be performed by an independent corporation with the necessary experience and expertise.

“Thus, with the endorsement of the industry players as required by Epira, Cusi issued DC 2018-01-0002. The House of Representatives, the Senate and the Joint Congressional Energy Commission [formerly JCPC] were given a report on all these steps that were made,” the DOE said.

Nograles had urged the House energy committee to conduct a probe, saying that a competitive bidding should have taken place even though Epira had mandated the creation of an IMO.