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AMID the
Philippine Electricity Market Corp.’s readiness to
operate the power market in the Visayas, the Department
of Energy (DOE) said Tuesday it has deferred the
proposed launching of the Visayas Wholesale Electricity
Spot Market (WESM).
“While
the PEMC, the governing body and market operator of the
WESM, and its Market Management System are technically
prepared, we cannot discount the fact that in the
Visayas there is inadequate capacity both in the
transmission and generation facilities,” Energy
Secretary Angelo T. Reyes said.
Reyes
said the department’s decision was based on the study
conducted by the Intelligent Energy Systems (IES), a
consultancy firm based in Australia.
The DOE
engaged the services of the IES, through a grant from
the World Bank-administered Policy and Human Resources
Development fund, to assess the expansion of WESM in the
Visayas.
In a
special meeting convened by Reyes on March 29 among the
heads of attached agencies, the DOE highlighted the
IES’s final report, which evaluated the market
participants’ readiness, system readiness,
supply-and-demand situation, competition among traders,
formulation of market power-mitigating measures,
provision of market information to all market
participants, possible WESM Rules amendments, and
development of a long-term plan for Financial
Transmission Rights.
Reyes
said that the DOE will carefully review the findings and
recommendations of the IES before coming up with a final
decision.
“International experience has taught us that competitive
markets should not begin its commercial operation in a
tight reserve situation, as this will give rise to a
situation where all existing generators will end up with
market power. Such conditions would be very difficult to
administer successfully and may discredit the benefits
of WESM,” Reyes added.
The
IES’s final report cited that it is imperative that the
DOE set in place structures to guarantee the proper
conduct of participants and sufficient competition.
The
report also cited some regulatory issues and provisions
of the WESM Rules that need to be reviewed, including
the pricing of must-run units and the processes for
provision of market information to the market
participants.
During
the March 29 meeting, Reyes formed a special committee
composed of the heads of PEMC, Power Sector Assets and
Liabilities Management Corp., National Power Corp.,
National Transmission Corp., and National
Electrification Administration tasked to resolve all
remaining issues within 60 days. One area that the
department is also looking into is the readiness of the
distribution utilities to participate in the WESM.
PEMC
president Lasse A. Holopainen emphasized that
ultimately, the electricity-supply problems in the
Visayas must be addressed instead, otherwise the quality
and consistency of supply in the region will continue to
deteriorate.
While a
tight reserve situation will lead to volatile and
relatively high spot prices, according to Holopainen,
the DOE has been encouraging distribution utilities to
maintain their supply contracts, which have fixed
prices, in order to protect their consumers from this.
Holopainen said WESM prices would then have a minimum
effect on the consumers’ price of electricity, but it is
expected that the market will give the right price
signals to new investors in the generation sector.
“Rest
assured, the department is committed to achieving an
efficient electricity market but we have the mandate to
protect the general welfare of our electricity consumers
in the Visayas against any anticompetitive behavior
brought about by abuse of market power,” Reyes said. |
