WESM expected to be privatized in 2010

MANILA, Philippines - Barring any major hitches, the wholesale electricity spot market (WESM) will likely be privatized by next year, a ranking energy official said yesterday.

She noted the privatization process will require several steps such as a thorough review of the existing rules, operating procedures and structures, as well as the law that governs the operations of the electricity spot market.

“We still have to conduct a legal audit,” said Melinda L. Ocampo, president of the Philippine Electricity Market Corp. (PEMC), on the sidelines of the Third WESM Annual Participants Meeting yesterday.

PEMC, the operator of WESM is also discussing the viability of going public as part of the requirements for the independent market operator (IMO). An IMO is the generic classification of the private entity that will take over WESM.

The prospective IMO however, will still have to go through the usual bidding process and due diligence stages.

PEMC is under the direct guidance of the Department of Energy (DOE). The electricity spot market, which currently operates only in Luzon, is a trading platform for buying electricity through power generators and buyers of bulk electricity such as large industries and power distribution utilities.

Meanwhile, Ocampo also revealed that the government is holding talks with the Asian Development Bank (ADB) for technical assistance in the form of a grant.

“We need international knowledge which the ADB can tap for us,” the PEMC head added.

The Electric Power Industry Reform Act (EPIRA) of 2001 requires that an IMO should have been appointed one year after WESM’s implementation, which was in 2007.

The privatization of the spot market to an IMO is widely perceived as a step to promoting transparency and efficiency.

Earlier, the Philippine Independent Power Producers Association (PIPPA) called the attention of Congress about the delay in privatizing the electricity spot market. PIPPA is a group composed of the country’s independent power producers, bulk of whose generated output are contracted or bought by state-owned National Power Corp. (Napocor).

PIPPA said the appointment of an IMO is necessary as the WESM operations has been marred by alleged irregularities involving government agencies trading in the power spot market.