WESM eyes P800M in transaction fees next year

Manila, Philippines - The Philippine Electricity Market Corp. (PEMC), the administrator of the Wholesale Electricity Spot Market (WESM), wants to collect almost P800 million from transaction fees next year.

In a public notice, the Energy Regulatory Commission (ERC) said PEMC is seeking approval to charge P0.0133 per kilowatt-hour (kWh) for transactions in the WESM next year, down by eight percent from the current P0.0144 per kWh.

“The market fee applied for covers (PEMC’s) funding requirements for calendar year 2013 in the amount of P798.88 million,” the ERC said.

Under the Electric Power Industry Reform Act (EPIRA) of 2001, “the cost of administering and operating the WESM shall be recovered by the market operator through a charge imposed on all members.”

But this will require prior approval of the ERC, which regulates the country’s power sector.

Specifically, PEMC will allocate P359.853 million for the compensation of 160 PEMC employees in Luzon and the Visayas.

The WESM administrator will also spend P348.58 million for maintenance and other operating expenses; P29.97 million for maintenance costs of the Market Management System (MMS) and infrastructure development; and P14.768 million for provisions for monitoring functions of the Energy department and the ERC.

Lastly, P45.709 will be allotted for market development projects like the business-to-business system in preparation for the implementation of the retail competition and open access (RCOA), the ERC said.

The RCOA, which will be launched late this year, allows customers to freely choose their electricity service provider.

“The market fee shall be apportioned among generators where the WESM operates according to the volume traded by each in the WESM,” the regulator said.

PEMC is WESM’s market operator, responsible for the day-to-day operations of the spot market as well as the registration of WESM members.

“This indicative market fee is based on the Luzon and Visayas energy forecast of 60,082 gigawatt-hours for calendar year 2013,” it added.

However, the application does not cover provisions for the payment of MMS loan and the new MMS project.

The ERC, for its part, scheduled public hearings for the proposed rates on Aug. 16 and Aug. 23 for Luzon and Visayas stakeholders, respectively.

The WESM was created by EPIRA, which required an electricity market that reflects the actual cost of electricity and lowers its price through more efficient production through competition.