THE ENERGY Regulatory Commission (ERC) has moved to discontinue the wholesale aggregator scheme, a measure meant to facilitate the involvement of distribution utilities (DUs) in the Wholesale Electricity Spot Market (WESM).
In a resolution signed on July 6 and released this week, the ERC said that after thorough and due deliberation, it resolved to “approve and adopt the discontinuance of the wholesale aggregator scheme and the rules for the registration of wholesale aggregators.”
ERC Executive Director Francis Saturnino Juan explained that the ERC used to allow an entity, which is not a generation company, to become an aggregator and supply DUs, particularly electric cooperatives (ECs) that cannot comply with the requirements of membership in the WESM.
“Now that most of these DUs were able to register already, the rationale for having an aggregator has already ceased,” he said.
Prior to the operation of the WESM in 2006, several DUs were unable to meet the technical and financial requirements in the WESM rules for them to register as members, and their nonmembership in the WESM effectively limited their supply options.
As such, the ERC promulgated in May 2006 the rules for the registration of the wholesale aggregators to facilitate their participation in the WESM. Likewise, the Department of Energy (DOE) issued a circular that required DUs to be WESM members, either as direct or indirect, otherwise they would be disconnected from the grid.
Another DOE circular was issued in 2014 that addressed the financial constraints of small ECs, thereby removing the necessity of providing support to them in terms of WESM membership.
As years passed, the ERC observed that the technical and financial limitations that hindered the DUs’ participation in the WESM, which necessitated the creation of the wholesale aggregator, no longer exist.
“No application and renewal for issuance of certificates of registrations as wholesale aggregator shall be accepted and evaluated, and all existing certificates of registration issued by the commission shall remain effective only until the end of their respective terms,” the ERC resolution added.
The ERC, however, shall continue to evaluate the market conditions. “If industry developments and circumstances so warrant, it may introduce a supply-aggregation scheme and/or authorize certain entities under such scheme to provide additional supply options to DUs and to ensure reliability of service, encourage efficiencies and reduction in its cost of electricity,” Resolution 12 stated.