PEMC eyes P550M in transaction fees from WESM

The Philippine Electricity Market Corp. (PEMC) expects to raise some P550 million this year from market transaction fees.

PEMC, the market operator for the wholesale electricity spot market (WESM) slated to begin commercial operations this quarter, will seek approval from the energy regulator to allow it to charge a one-time annual registration fee of P180,000 for all market participants.

The fees will also be imposed on participating power generators and other sellers in the spot market.

PEMC said the proposed free will translate to a trading fee of P0.01361 per kilowatt-hour or P13.31 per megawatt-hour; or if based on a reference trading volume of 50 mwh over 12 months, it would cost around P8,166.

The proposed market registration fee shall cover cost components relating to access or digital certificate; installation and configuration of the digital certificate; orientation and training; help desk facility and publications.

Based on the proposal, the transaction fee shall be treated as a pass on cost allocated to WESM participants.

The revenues to be generated from the imposition of the fees would be utilized to make the PEMC a self-sustaining entity, it added.

"The market fees we have applied for is very negligible, very cheap as compared to what is being charged by other electricity markets," PEMC president Lasse A. Holopainen said.

In justifying the proposed transaction fee, PEMC said it is a reasonable cost to cover operating and capital expenditures for the year 2006.

The transaction fees for the initial year would primarily cover market operations‚ costs such as billing and settlements; administration and corporate services; pre-operating loan cost recovery; and eventually, the cost recovery for the setting up of the WESM’s physical infrastructure.

Holopainen also noted that the country was fortunate to build a good quality infrastructure for the WESM at a lower cost.

In a related development, PEMC department head for billing and settlement Eduardo B. Buhain said the budgeted market fees for 2006 does not include yet the payments or provisions for the recovery of the development cost for the market management system (MMS) of WESM.

The MMS was covered by a loan from the Asian Development Bank (ADB) and the Japan Bank for International Cooperation.