DOE sets guidelines for new power spot market operator

MANILA, Philippines — The Department of Energy (DOE) has released the guidelines for the establishment of the independent market operator (IMO) of the electricity spot market.

The agency has issued Department Circular DC2018-01-0002, titled “Adopting Policies for the Effective and Efficient Transition to the IMO” for the wholesale electricity spot market (WESM).

Under the circular, the DOE and the Energy Regulatory Commission (ERC) will ensure fair competition and the promotion of public interest as envisioned in the Electric Power Industry Reform Act (EPIRA).

DOE Secretary Alfonso Cusi said the WESM and IMO would be consistent with the wisdom of EPIRA to ensure quality, reliable, secure, affordable and reasonable prices and electricity supply through a transparent, free and competitive power market.

“WESM is an added option for the electricity sources of our consumers, especially addressing the stability and efficiency of power supply,” he said.

The DOE said the IMO policy 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.

In particular, the issuance will provide guidelines on the procedures to establish the merit order dispatch instructions and determine the market-clearing price for each time period.

It will also direct administration of the market, including criteria for admission to and termination from the market which includes security or performance bond requirements, voting rights of the participants, surveillance and assurance of compliance of the participants with the rules and the formation of the WESM governing body.

Lastly, the policy will prescribe guidelines for the market operation in system emergencies as well as amending the rules.

“This policy on IMO will ensure full public accountability to safeguard, foremost, our energy consumers,” Cusi said.

The Philippine Electricity Market Corp. (PEMC), which currently operates WESM, has formalized the transition plan for the creation of an IMO to take over the operations of the spot market by the second quarter of the year.

Under the approved transition plan, the IMO will be incorporated as a non-profit company which is independent of government and industry participants.

Meanwhile, PEMC shall remain as the governing body of the spot market with its board of directors composed of participant representatives and independent members.

Cusi earlier said the long-delayed IMO would start operating WESM by June this year.

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, which was created under EPIRA.

But under EPIRA, the WESM must be transferred to an IMO one year after its establishment.