PEMC expects WESM operations to start in May

The Philippine Electricity Market Corp. (PEMC) expects the commercial operations of the wholesale electricity spot market (WESM) in Luzon to start in May this year as soon as the Energy Regulatory Commission (ERC) approves the spot market’s pricing mechanism.

PEMC president Lasse A. Holopainen said the WESM should start to give way to open access. The PEMC has been tasked to handle the WESM operations.

"WESM is a precondition for open access, a significant component of the ongoing restructuring and privatization of the power industry,"Holopainen said.

The PEMC chief noted that the WESM’s commercial operations will parallel the privatization program for generation and transmission assets."

Designed to "change the existing monopoly in the electric power industry to a competitive market," WESM will ensure more affordable electricity prices for residential, industrial and business consumers, he said. Through the spot market, the Philippine power industry will build the foundation for open access and retail competition.

The WESM structure, where participants will facilitate the trading of electricity and where third parties will be granted access to the power system, will allow market forces to determine prices that will consequently encourage efficiency and competition.

"A dynamic market will give generators the leeway to reduce electricity prices," Holopainen said.

Holopainen said the WESM rules have been drafted and approved. The PEMC has also substantially completed the manuals and procedures that will govern the electricity spot market. Pricing mechanisms have already been filed with the ERC for review and approval.

The PEMC has likewise set a functional locational marginal pricing market management system that recently passed an independent international auditor review.

"I believe we have set a new international benchmark in terms of development time and cost," Holopainen said.

To ensure the readiness of the electric power industry on WESM, the PEMC conducted intensive orientation and training of over 100 companies on spot market operations through hands-on simulations. "The WESM board has also approved a project to support electricity cooperative readiness," Holopainen said.

Saying that WESM is already on the take-off stage, Holopainen sought the active participation of investors and market players in the electricity spot market.

He also assured WESM participants of a level playing field by providing equal access to information that will help them "understand and increase compliance with WESM rules."