WESM seeks to collect P900M from consumers

MANILA, Philippines - The Philippine Electricity Market Corp. (PEMC), the administrator of the Wholesale Electricity Spot Market (WESM), is seeking regulatory approval to collect almost P900 million from market participants to pay off its debts.

PEMC’s payment of its Market Management System (MMS) loan will result in an additional market transactions rate 0.46 centavo per kilowatt-hour (kWh) in the next three years.

In a public notice the Energy Regulatory Commission (ERC) said it is applying for the approval of P863.341 million in additional market fees in the next three years.

Specifically, market players will have to shoulder slightly higher rates at 0.51 centavo per kwh for 2013, 0.45 centavo per kWh for 2014 and 0.38 centavo per kwh for 2015. To date, the market fee is 1.44 centavos per kwh.

Fresh funds would be used to pay the MMS loan, PEMC said.

In March 2004, the National Transmission Corp. (Transco) entered into a contract to develop the WESM MMS with ABB Inc. Network Management Unit. It also hired a project management consultant The Marketplace Co. Pty. Ltd.

In October 2004, Transco assigned the market operations functions to PEMC, which became the project contract administrator for the creation of an electricity spot market.

PEMC will pay state-run Power Sector Assets and Liabilities Management Corp. for the P728.557-million it lent to the WESM operator, plus interest, that was used to pay the contractors while the market’s system was being set up.

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.”

For the payment scheme, PEMC said it is applying for “the authority to enter into a facility agreement with a commercial bank to refinance the MMS loan in an amount not exceeding the additional market fees, the principal and interest payments of which shall be recoverable through market transaction fees.”

PEMC plans to enter into a syndicated loan facility of up to P800 million that will be payable in three years at a fixed interest rate of 7.75 percent per annum.

Meanwhile, PEMC plans to investigate nine firms for possible breach of trading rules.

PEMC president Melinda Ocampo said the market surveillance committee recommended the companies for investigation.

For instance, some companies could have violated the rule on timely dispatch of electricity to the consumers, Ocampo 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.

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.